Saudi Aramco's GES plus contract delays frustrates contractors

12 July 2011

Bureaucracy prolonging registration process for the five international contractors who have signed deals with oil giant

Oil major Saudi Aramco’s plans for increasing the amount of engineering and project management work it carries out under its general engineering services plus (GES plus) contract are expected to be delayed.

Only one of the companies that has signed a GES plus deal with Aramco is now fully registered under the scheme – the US’ Jacobs Engineering. Some of the other signatories are now facing major delays due to increased bureaucracy in the bidding process.  

GES Plus - bid status
Foster WheelerSigned and in registering process
Mustang EngineeringSigned and in registering process
KBRSigned and in registering process
Jacobs EngineeringSigned and fully registered
TechnipNo deal as yet
SNC LavalinSigned and in registering process
WorleyParsonsNo deal as yet
FluorNo deal as yet
Source: MEED

“Jacobs is home and dry and I believe that [the US’] Mustang Engineering is not too far away, either,” says an oil and gas source familiar with the GES plus contract. “But some of the other contractors might not get fully registered until November or December.”

As well as Jacobs and Mustang, the other signatories of the GES plus deal are the US’ FosterWheeler and KBR, as well as Canada’s SNC Lavalin.

The source says the delays are the result of new regulations for Saudisation programmes at the Labour Ministry, as well as increased bureaucracy with other bodies including the Saudi Council of Engineers.

“While I still believe that Aramco supports the GES plus, I think many of the companies involved will have a slightly more jaundiced view after all the problems they have faced,” says the source.

The delays affect all of the companies, because Jacobs and Mustang would not be allowed to solely bid on work without competition from the other GES plus contractors.

Some officials from the GES plus companies have also voiced concerns about the lack of work being won by GES plus signatories and are worried 2011 could be a lean year due to the delays.

“If Fluor wins the [utilities and offsites] package on the Aramco Dow project for submitting the lowest bid, then you can’t blame the GES plus contractors for being slightly upset with that,” the source says. “That is worth over 5 million man hours and awarding it on a cost basis sends the wrong message to the companies trying to develop their Saudisation programmes.”  

Saudi Aramco and the five GES plus signatories were not available for comment when contacted by MEED.

The GES plus involves the provision of detailed engineering and project management services to Aramco.

Every successful signatory of the GES plus has to form partnerships with local engineering companies to ensure Saudi nationals are gaining the requisite experience (MEED 26:11:10).


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