Saudi Aramco on verge of awarding Saipem pipeline contract

07 April 2014

Italian contractor Saipem now in front to win Saudi Aramco’s Shedgum to Yanbu natural gas pipeline

Saudi Aramco is on the verge of awarding Italy’s Saipem the contract to build the Shedgum to Yanbu natural gas liquid (NGL) pipeline expansion project in Saudi Arabia.

MEED reported in February that Saipem had joined the race to be awarded the project, despite being the third-lowest bidder behind the UAE/Australia’s Dutco McConnell Dowell and the Dubai-based Dodsal Group.

However, concerns have emerged within Aramco regarding Dodsal’s workload, due to it being the frontrunner to land the first part of the state-owned oil company’s Master Gas System Expansion (MGSE) project as well as up to $1.17bn-worth of Kuwait contracts.

Dutco McConnell Dowell was the lowest bidder with a proposal of about $375m, but the initial bid had a limit for the excavation of rock. Because of this, the company was no longer considered by Aramco.

“A series of events has put Saipem in a good position to win this contract when a couple of months ago no one really thought it had a chance,” says an executive working in the kingdom’s oil and gas industry. “It is now the clear favourite.”

Dodsal had been lobbying hard to convince Aramco it had the capabilities to execute all its potential contract wins, but it is now likely the firm will have to settle for the MGSE in Saudi.

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

The pipeline will have a total length of 585 kilometres and a diameter of 30 inches. Aramco said in 2013 that more than 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.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications