J Ray McDermott is frontrunner for Saudi Arabia's Safaniyah oil deal

10 March 2010

Saudi Aramco will award the offshore oil infrastructure deal in April

UAE-based J Ray McDermott has emerged as the frontrunner to win an estimated $1bn deal of infrastructure work at the offshore Safaniyah oilfield in Saudi Arabia, according to sources close to the project.

State energy firm Saudi Aramco, the client on the project, has been in talks with firms interested in the deal since they submitted final bids on 11 January, and J Ray McDermott is now seen as being in pole position to take the job, executives working on the deal tell MEED.

Other firms bidding on the engineering, procurement and construction (EPC) deal included Italy’s Saipem and UAE-based National Petroleum Construction Company (NPCC). A formal award is expected in April, one source close to the matter tells MEED.

The contract includes the supply and installation of a significant number of undersea electrical cables, worth about $250m. However, Aramco was considering separating this work from the main contract and issuing a separate tender for it and it is not clear if J Ray will work on this part of the scheme.

The remaining infrastructure work, which includes the construction of two offshore oil and gas platforms, while modifying another nine, and building subsea pipelines is worth about $750m.

The Safaniyah field is the largest offshore oil field in the world and the third-largest oil field overall, according to the US’ Energy Information Administration.

Aramco currently produces about 1.2 million barrels a day (b/d) of oil from the field, although it could produce up to 1.9 million b/d if required, Saudi Arabia’s Energy Minister Ali al-Naimi said in 2008.

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