Saudi Aramco reissues tenders for Jizan gasification project

04 February 2014

Oil major Saudi Aramco invited contractors to bid again after costs increased to more than $10bn

Saudi Aramco has reissued the tenders for three packages at its planned integrated gasification combined-cycle (IGCC) power project at Jizan Economic City (JEC) in the southwest of the kingdom.

MEED reported in January that the state-owned oil company was planning to retender the packages in a bid to trim costs, which had spiralled upwards to more than $10bn. The planned project will be built adjacent to Aramco’s $7bn Jizan refinery currently under construction.

The three packages are:

  • Gasification
  • Offsites and utilities
  • Sulphur recovery units (SRU)

The power package is not being tendered and is now expected to be awarded to China’s Sepco Electric Power Construction Corporation, the lowest bidder in the initial tender with a bid of $1.8bn. This was the lowest bid by about $700m and Aramco is now expected to negotiate a price for the optimised scope on a single-source basis.

The new tenders have given bidders two options: the first involves minor adjustments to the original tender; the second is a reduced scope.

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.

Funding for the scheme is expected to be signed off in April, indicating that awards will be made in May.

The news of a retender will give renewed hope to EPC contractors that did not submit the lowest bids in the initial submission round. However, Jizan’s isolated geographical position has led most EPC contractors to refrain from the kind of aggressive bidding witnessed in recent years in more developed areas, such as Jubail in the Eastern Province.

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.

Aramco was not available for comment when contacted by MEED.

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