Saudi Aramco reconsiders strategy for $600m Shoaiba bulk plant

27 September 2011

Oil giant now considering lump-sum turnkey, as well as build-own-transfer for storage facility on Red Sea coast

Saudi Aramco will make a decision on what execution strategy they will use for its planned $600m bulk storage facility at Shoaiba on the Red Sea coast by mid-October.

The initial plan involved tendering the project on a build-own-transfer (BOT) scheme with a 22-year lease period and three years for construction.

Now Aramco is also considering issuing tenders on a lump-sum turnkey (LSTK) basis and taking ownership of the facility themselves.

Saudi demand growth 
Fuel oil -2.511.08.0
e=Estimate. Sources: Joint Oil Data Initiative; HSBC

“Aramco is looking at its options and they are now thinking that tendering on a LSTK basis might be a better option,” says a source familiar with the deal. “BOT is an unusual method of execution [for Aramco], which is why they are looking at all the available options.”

Around 22 bidders were initially interested in the project either as standalone companies or part of joint ventures, although this is expected to fall to around 10, regardless of which procurement strategy the company uses (MEED 15:4:11).

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 at Yanbu and Petro Rabigh before being distributed along the southwest coast.

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 the Saudi Arabia, as well as several smaller storage areas spread across the kingdom.

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