The lowest bidders have emerged for state-owned oil major Saudi Aramco’s planned gasification project at Jizan in the southwest of the kingdom, indicating that costs have spiralled to about $10bn for the scheme.

MEED reported in mid-November that the costs had risen considerably and Aramco is being forced to try and find a solution to the new estimate, which dwarfs the initial $3bn-5bn figure for the scheme.

The lowest bidders and their estimated bids are:

  • Gasification unit – Saipem (Italy), $3bn
  • Sulphur recovery unit (SRU) and tail-gas treatment (TGT) unit – Larsen & Toubro (India), $1bn
  • Combined-cycle power plant – Sepco Electric Power Construction Corporation (China), $1.8bn
  • Offsites and utilities – Sepco Electric Power Construction Corporation, $800m

However, doubts have emerged over Sepco’s bid of $800m for the offsites and utilities, with the second-lowest bid being $1.9bn.

“Sepco’s bid is so low it would not even cover the cost of the building materials,’ says an oil and gas source working in Saudi Arabia. “There is no way [the work] would be able to be executed for such a low price.”

The source adds that Sepco’s bid for the power plant package is also considerably less, about $700m lower than the second-owest bid. This means Aramco could decline both bids for the scheme. However, a decision has yet to be made regarding this. If the two second-lowest bids were accepted, then added to the two remaining packages – the seawater intake and the air supply – costs will come in at about the $10bn mark.

“No one now knows whether Aramco will go ahead as planned or look for another solution,” says the source. “They are locked in discussions and will have to decide whether to invest the $10bn or go with a cheaper alternative.”

Alternatives could involve having a captive power plant for the Jizan refinery, building a more conventional facility that does not involve gasification or lowering the capacity of the gasification plant. 

The scope of works for the entire scheme is the construction of an integrated gasification combined-cycle (IGCC) power facility, which will have a capacity of 4,000MW. The UK/Dutch Shell Group is providing the gasification and acid-gas removal technologies, and will also provide engineering services on the project.