Saudi Aramco is expected to tender the engineering, procurement and construction contract for the $600m bulk storage facility it is planning at Shoaiba on the Red Sea coast in the fourth quarter of 2013.

The US’ Mustang Engineering is carrying out the front-end engineering and design (feed) on the long-awaited scheme and that is expected to be completed by the end of July. This should result in an EPC tender being floated in October or November.

“This project has been around for more than two years now and many people in the industry thought that it was going to be shelved or even cancelled,” says an oil and gas source based in Saudi Arabia. “Aramco always wanted to build the facility, it just had other priorities.”

The facility will consist of a marine terminal and a tank farm that will be able to store about 400,000 barrels of gasoline, benzene and diesel. The products will be shipped in from refineries along the kingdom’s Red Sea coast before being distributed across the southwest.

The plan is for Aramco to bypass the busy international port at Jeddah and ensure its operations in the southwest of the kingdom more efficient and streamlined. Shoaiba is about 220 kilometres south of Jeddah, so it is a lot closer to the market.

The project will be executed on a lump-sum turnkey (LSTK) basis. MEED reported in 2011 that Aramco had been considering a build-own-transfer (BOT) scheme for the project with plans to lease the plant for 22 years plus three years for construction, but this is not going to happen.

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

Saudi Arabia’s consumption of heavily subsidised gasoline and diesel is growing by up to 7.2 per cent a year.