South Korean firm frontrunner for Yanbu refinery deal

02 March 2010

Yanbu scheme likely to cost less than similar project at Jubail

South Korea’s GS Engineering & Construction is the frontrunner to win a construction contract for the hydrocracker unit on the new $9bn-plus Yanbu refinery on Saudi Arabia’s Red Sea coast according to contractors bidding on the scheme.

The joint venture partners behind the project, local state energy giant Saudi Aramco and the US’ ConocoPhillips, opened commercial bids outlining cost proposals for the main construction packages on the project on 8 February.

Sources close to the scheme now say that GS submitted the lowest price for the hydrocracker package, closely followed by fellow South Korean firm Daelim Corporation. The exact value of the bids are not yet known, but the engineering, procurement and construction EPC deal is estimated to be worth around $1.2bn.

The low bidders emerged for three of the other main EPC deals in February. A consortium of Japan’s Chiyoda and South Korea’s Samsung are the frontrunners to win the estimated $1.2bn coker unit, South Korea’s Hyundai Engineering & Construction the $970m crude processing facility and Spain’s Tecnicas Reunidas the $2.3bn gasoline processing unit (MEED 11:2:10).

A fifth EPC deal, to build storage tanks at the refinery, is being contested by two firms, South Korea’s Hanwha and China’s Wilson Shanghai who submitted bids of around $500m, sources close the tendering process tell MEED.

Bids for a $450m solids handling unit at the plant are due in by 22 March.

Firms bidding on the deals describe the tender as fiercely competitive and believe that the overall cost of the plant will be less than that of a similar $9.6bn Jubail refinery that was tendered last year by Aramco and France’s Total.

Aramco has yet to complete the financing for the Jubail refinery. It had hoped to have this in place before the end of 2009. Both refineries are designed to process 400,000 barrels a day (b/d) of crude oil.

Sources close to the project tell MEED that the Yanbu prices were opened in February to give the partners an initial idea of the overall price of the scheme, and that awards are unlikely before Aramco has determined the cost raising finance for the Jubail refinery.

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