Saudi Aramco awards $1bn-plus pipeline deal to local group

20 September 2016

Saudi KAD confirms contract win reported by MEED in February

Local firm Saudi KAD Contracting has been awarded four engineering procurement and construction (EPC) contracts to build pipelines for state-owned oil and gas producer Saudi Aramco.

The contractor did not disclose the size of the deal, but local industry sources told MEED in February that the awards were worth a total of more than $1bn.

Scope includes installing pipelines for Aramco’s phase two Master Gas System Expansion (MGSE) and Fadhili Gas Programme megaprojects.

MGSE phase two when completed will install a 1,118-kilometre pipeline network to expand the capacity of Aramco’s Master Gas System to 12.5 billion cubic feet a day (cf/d), Saudi KAD said.

The Al-Khobar-based company was vying with several overseas firms for the three separate EPC packages on MGSE pipelines after bids were submitted in May 2015.

The scope of the contracts also includes EPC work for valve stations, metering systems, launcher and receiver stations, fibre-optic cables, as well as road and rail crossings.

“The EPC will be performed totally in-kingdom, thereby positioning Saudi KAD as the first fully-integrated Saudi EPC contractor,” the company said in its announcement.

The company is already working on Aramco’s Onshore Maintain Potential Programme.

In November 2015, China’s Shandong Electric Power Construction Corporation (Sepco) won an estimated $750m EPC deal on the compressor booster station for phase two of the MGSE. The second phase of the expansion is expected to be completed by the end of 2018.

The first phase of the MGSE is under execution after several awards were made by Aramco in 2014. These include pipeline deals to Italy’s Saipem, the UAE’s Dodsal, and CAT Group, as well as a $1.3bn deal to Sepco for the construction of two booster gas compressor stations.

The first phase will boost the MGSE’s capacity to cf/d from 8.4 billion cf/d. The second phase will expand the capacity further to 12.5 billion cf/d.

Aramco is investing billions of dollars in increasing its gas production for domestic use. This includes associated and non-associated output, as well as non-conventional forms of the resource, such as tight gas.

The Master Gas System is operated by Aramco and is one of the world’s largest hydrocarbons networks. Construction started on the scheme in the mid-1970s as a means to transfer gas across the kingdom to support industrialisation. The system became fully operational in 1982 and allows Aramco to market all of its gas domestically.

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