Saudi Aramco to make two key gas awards by end of September 

18 September 2009

SNC Lavalin and KBR in line for deals at Arabiyah and Shaybah fields

State-run oil company Saudi Aramco will award two deals by the end of September on its largest planned gas-processing plants, which are being developed  to meet the kingdom’s increasing industrial demand for gas.

Contractors say Canada’s SNC Lavalin submitted the lowest bid for work on both the Arabiyah and Shaybah gas development schemes, which are located in the Eastern Province and Rub al-Khali (Empty Quarter) respectively.

The contracts cover combined project management support and front-end engineering and design (Feed) work for the fields.

One Al-Khobar-based contractor who bid for both contracts says although SNC submitted the lowest bid, the Canadian company only expects to win one of the deals. Contractors expect Aramco to give the second job to US contractor KBR, which submitted the next best price.

Commercial bids were submitted in August. Other bidders include Foster Wheeler, Fluor Corporation, and Jacobs Engineering, all of the US, Australia’s WorleyParsons and France’s Technip.

“The thinking is that Aramco never likes to give multiple contracts to one company if it can help it,” says the Al-Khobar-based contractor. “It seems that it will split the deals between SNC Lavalin and KBR to ensure the workload is not too much for either.”

Both SNC and KBR have yet to be notified which contract they are likely to win.

However, sources close to the two companies say SNC is most likely to win the Arabiyah contract, while KBR will carry out work on the Shaybah gas plant.

“They will receive one contract each, and it looks like an award will be made in the final week of September,” says the source.

SNC has been working on a major project for Aramco at the remote Shaybah field for the past three years. In 2006, it won a $700m contract to build central-processing facilities at Shaybah as Aramco increased the capacity of the field from 500,000 barrels a day (b/d) to 750,000 b/d.

KBR is working on several consultancy deals in the kingdom including project management of the $26bn Ras Tanura refinery upgrade and integrated petrochemicals complex.

The Arabiyah plant in the Eastern Province will have capacity to process 1.2 billion cubic feet a day (cf/d) of gas from the offshore Arabiyah field, which was only discovered in 2008.

The Feed contractor will consider two options for processing the gas. One is the construction of an onshore gas plant at Manifa to produce 750 million cf/d of gas and 900 tonnes a day of sulphur via two gas-processing trains.

The other involves expanding the existing facilities at Manifa.

The Feed and project management support contract at Shaybah covers the installation of a natural gas liquids recovery facility (MEED 17:7:09).

Gas for the facilities will come from the Shaybah field. Aramco estimates that the field holds 14.3 billion barrels of crude oil reserves and 25 trillion cubic feet of associated gas.

The field currently produces 750,000 b/d of oil, but the associated gas is either flared off or reinjected into the field.

Aramco expects both plants will start operations by the first quarter of 2014.

Aramco produced 8.3 billion cf/d of gas in 2008, exceeding domestic demand.

But in March, demand for gas outstripped supply and the kingdom was forced to import fuel oil to use as feedstock for its major power stations.

Analysts forecast Saudi gas production will fall off this year if Riyadh does not act to boost output.

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