Saipem emerges as contender for Shedgum to Yanbu pipeline

18 February 2014

Italian contractor could be awarded by Aramco despite having third lowest bid

Italy’s Saipem has emerged as a shock contender to be awarded the Shedgum to Yanbu natural gas liquid (NGL) pipeline expansion project despite being the third lowest bidder for the scheme.

MEED reported in early February that the UAE/Australia’s Dutco McConnell Dowell and the Dubai-based Dodsal Group were the two lowest bidders on the project. 

Dutco McConnell Dowell is the lowest bidder with a proposal of about $375m, but the initial bid had a limit for the excavation of rock and due to this the company is likely to be eliminated from the process by Aramco.

Dodsal’s bid is hovering around the $400m mark, but the contractor looks set to be awarded a $1.65bn contract by Aramco to carry out the Master Gas System Expansion (MGSE) phase 1 project as well as up to $1.17bn worth of schemes in Kuwait.

In-kingdom sources now say that these potential awards have led Aramco to reconsider awarding further work to the company. Saipem’s bid is within 5 per cent of Dodsal’s so this has put the Italian contractor in a good position to be awarded the work.

“Dodsal is lobbying Aramco hard to try and convince them that they have the capabilities to execute both of these pipeline schemes as well as the work in Kuwait,” says a Saudi-based an oil and gas source. “But Aramco will take some convincing that they can execute over $3bn worth of schemes simultaneously.”

The pipeline will transfer NGLs from Shedgum to Yanbu Industrial City in order to supply essential feedstock for heavy industry.

The pipeline has a total length of 585 kilometres and the pipeline will have a diameter of 30 inches. Aramco stated in 2013 that over 70 per cent of the materials needed for the scheme would be sourced locally from manufacturers.

Aramco is investing heavily in its master gas initiative which is aimed at transporting natural gas around the kingdom for industrial use and power production.

Saudi Aramco was not available for comment when contacted by MEED.

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