Saudi Aramco is planning to retender three packages at its planned integrated gasification combined-cycle (IGCC) power project at the Jizan Economic City in the southwest of the kingdom, after reconfiguring the scope to trim billions of dollars from the budget.

MEED reported in November that costs had increased to $10bn for the scheme and that Aramco was considering several options for the proposed facility, which will be built adjacent to Aramco’s $7bn Jizan refinery currently under construction.

The US’ KBR is partnering Aramco in a design optimisation process aimed at solving several issues related to the cost of the gasification project. Sources indicate this will result in 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.

Three out of the four packages are now likely to be retendered to international engineering, procurement and construction (EPC) contractors. They are:

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

The tenders will be put out to bid early in the first quarter of 2014 with awards being made in May. Aramco is hoping to reduce the budget by at least $2bn.

The power package is not expected to be tendered and instead sources say it will 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.

Sepco was also the lowest bidder for the original offsites and utilities package, with a price of $800m, but it will have to submit new tenders on a competitive basis.

The news of a retender will give renewed hope to EPC contractors that did not submit the lowest bids in the initial submission round. Along with Sepco, Italy’s Saipem and India’s Larsen & Toubro (L&T) were the two respective lowest bidders for the gasification and SRU. Saipem had bid $3bn for the gasification package, while L&T submitted a price of $1bn for the SRU.  

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.