Saipem and Tecnicas Reunidas favourites for Aramco's Jizan gasification

07 April 2014

Italian contractor set for two packages worth $3bn with Spanish contractor picking up offsites and utilities

Italy’s Saipem and Spain’s Tecnicas Reunidas have emerged as the two favourites to be awarded the three re-tendered packages at Saudi Aramco’s integrated gasification combined-cycle (IGCC) power project at Jizan Economic City (JEC) in the southwest of the kingdom.

Saipem is expected to be awarded two engineering, procurement and construction (EPC) contracts, worth a combined $3bn, at the scheme. These will be the gasification plant and sulphur recovery unit (SRU).  Saipem is the lowest bidder for the gasification package, but India’s Larsen & Toubro is the lowest for the SRU.

“Aramco is going to award the two packages to Saipem,” says a source familiar with the contract. “[Aramco] must prefer one contractor to do both packages.”   

Tecnicas Reunidas is the favourite to pick up the offsites and utilities package, with a bid estimated at about the $2bn mark.

MEED reported in February that the power package is not being tendered and is expected to be awarded to China’s Sepco Electric Power Construction Corporation, the lowest bidder in the initial tender with a bid of $1.8bn.This figure is about $700m below the second-lowest bidder, which led Aramco to secure the deal.

Capacity is expected to remain at 4,000MW, making the project the largest gasification project anywhere in the world. Costs have been trimmed due to the design optimisation undertaken by the US’ KBR and Aramco.  

The other three packages for the Jizan gasification scheme were retendered in early 2014, after costs for the original scope had spiralled to more than $10bn. Sources now indicate that Aramco would be satisfied if the scheme came in at about $7.5bn.

The UK/Dutch Shell Group is providing the gasification and acid-gas removal technologies, and will also provide engineering services on the project.

The gasification process works by mixing hydrocarbons, such as coal or heavy oil, with oxygen to produce synthesis gas (syngas). This is then used to fire a turbine and create power.

Saudi Aramco is expected to make a decision regarding the re-bids by April with awards being made in May. The facility will be constructed adjacent to the $7bn Jizan Refinery Project, which is under construction.

Saudi Aramco was unavailable for comment when contacted by MEED.

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