The $15bn petrochemicals joint venture between Saudi Aramco and the US’ Dow Chemical has suffered a few setbacks in the past, but it now looks like it is ready to move forward.
Aramco knows Saudi nationals working for local contractors need to gain vital experience
Aramco is talking to contractors to find out unit rates and costs as it looks towards the construction phase of the huge complex, which will be located at Jubail in the Eastern province.
Contractors in the kingdom say they are now convinced the joint venture partners are serious this time and no one can envisage any further problems.
Local contractors are also delighted to hear that Aramco is planning to allocate 30 per cent of the construction budget to Saudi Arabian firms. This translates to $4bn-worth of contracts for local businesses.
As a state-owned company, Aramco has a responsibility to support business in the kingdom and it is a duty it takes seriously. Aramco knows Saudi nationals working for local contractors need to gain vital experience in building world-scale projects if the kingdom is to produce the engineers and technical staff it needs to drive its economy forward.
Although locals will be favoured, the contracts are still going to be hotly contested by engineering, procurement and construction (EPC) contractors, as well as subcontractors.
Winning a major $1bn-plus EPC package on the Aramco Dow project will mean a large percentage of any contractor’s budget forecast will be hit, so highly competitive bidding is expected by a range of consortiums aiming to offer as low a price as possible.
Expect also to see EPC contractors from Western countries form partnerships with Chinese and Indian contractors to try to combat the low bids that are surely going to be submitted by the South Koreans.
With around $14bn-worth of work being offered, there is a lot at stake for both local and international contractors.