State-owned oil major Saudi Aramco is hoping Jizan retender costs will be lower than original $10bn
Saudi Aramco has received the revised bids from a shortened list of engineering, procurement and construction (EPC) contractors for the three retendered packages at its proposed integrated gasification combined-cycle (IGCC) power project at Jizan Economic City (JEC) in the southwest of the kingdom.
MEED reported in February that the state-owned oil company had issued the tenders in order to trim costs from the original bids and set a bid deadline of 11 March. Contractors were instructed to submit the new bids with two options. The first option is based on value engineering on the original scope. The second option is a reduced scope based on a reduced capacity of about 3,000MW.
The three packages and the remaining bidders on each scheme are:
- Daelim Industrial (South Korea)
- Foster Wheeler (US)/Hyundai Heavy Industries (South Korea)
- Hyundai Engineering & Construction (South Korea)
- Saipem (Italy)
- Tecnicas Reunidas (Spain)
Sulphur recovery units (SRU)
- Daelim Industrial
- Hyundai Heavy Industries
- JGC Corporation (Japan)
- Larsen & Toubro (India)
Offsites and utilities
- Daelim Industrial
- Daewoo Engineering & Construction (South Korea)
- Tecnicas Reunidas
The US KBR partnered Aramco in a design optimisation process aimed at solving several issues related to the cost of the gasification project. This involves a reduced scope for the gasifiers and the power blocks, which will, in turn, lower the capacity of the plant from 4,000MW to a figure closer to 3,000MW.
The UK/Dutch Shell Group is providing the gasification and acid-gas removal technologies, and will also provide engineering services on the project.
The gasification process works by mixing hydrocarbons, such as coal or heavy oil, with oxygen to produce synthesis gas (syngas). This is then used to fire a turbine and create power.
MEED also revealed the power package is not being tendered and is now expected to be awarded to Chinas Sepco Electric Power Construction Corporation, the lowest bidder in the initial tender with a bid of $1.8bn.This figure is about $700m below the second-lowest bidder, which led Aramco to secure the deal.
The other three packages for the Jizan gasification scheme were retendered in early 2014, after costs for the original scope had spiralled to more than $10bn. Sources now indicate that Aramco would be satisfied if the scheme came in at about $7.5bn, although that is still a high figure for a power plant.
Jizans isolated geographical position has not helped and aside from Sepco, most EPC contractors have refrained from the kind of aggressive bidding witnessed in recent years in more developed areas, such as Jubail in the Eastern Province.
Saudi Aramco is expected to make a decision regarding the rebids by April with awards being made in May. The facility will be constructed adjacent to the $7bn Jizan Refinery Project, which is under construction.
You might also like...
A MEED Subscription...
Subscribe or upgrade your current MEED.com 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.