Saudi Aramco has decided on the strategy it will use to build a $600m bulk storage facility at Shoaiba that will provide refined petroleum products to the southwest of the kingdom.

MEED reported in 2011 that the state-owned oil company was initially planning to pursue a build-own-transfer (BOT) scheme for the project.

However, a contracting source familiar with the scheme says that Aramco has decided against BOT and will instead execute the project using a lump-sum turnkey (LSTK) strategy at a later date.

“The Shoaiba project has been debated for about a year now and it would have been unusual for Aramco to use BOT for its in-kingdom distribution network,” says the source. “Now LSTK will be used, but Aramco has given no timeline yet as to when prequalification will start or when tenders will be issued.”  

The facility will consist of a marine terminal and a tank farm with a 400,000-barrel storage capacity that can house gasoline, benzene and diesel. The products will be shipped in from refineries at Yanbu and PetroRabigh before being distributed along the southwest coast.

Shoaiba is about 220 kilometres south of Jeddah and Aramco believes that a bulk plant would make their domestic distribution operations more streamlined.

The project is the latest of several schemes aimed at revamping the kingdom’s distribution network of petroleum products.

Other bulk storage facilities currently under construction include a $140m plant at Wasea in the central region of Saudi Arabia, as well as several smaller storage areas spread across the kingdom.

Saudi Arabia has one of the highest annual growth rates for oil use in the world at 6 per cent. Gasoline demand is growing even more quickly at 7.2 per cent.