Foreign Firms Bid for $6b Saudi Gas Project

Foreign Firms Bid for $6b Saudi Gas ProjectForeign Firms Bid for $6b Saudi Gas Project

Foreign engineering firms have submitted bids to build a gas plant in eastern Saudi Arabia for state oil giant Saudi Aramco at an estimated cost of $5 billion to $6 billion, industry sources said.

Aramco’s decision to move ahead with the project at Fadhili is a sign that Saudi Arabia continues to make big investments that it views as key to its economic future, despite slowing or shelving some less vital projects as the plunge in oil prices since last year hurt state finances.

The new plant is to have a processing capacity of 2.5 billion feet per day of sour gas from the onshore Khursaniyah and offshore Hasbah fields, Gulf Business reported.

South Korea’s Daelim Industrial, Hyundai Engineering and Construction and Britain’s Petrofac have bid for the project individually, the sources said.

In addition, three consortiums have been formed to bid: South Korea’s GS Engineering and Construction with Spain’s Tecnicas Reunidas, Italy’s Saipem with Japan’s JGC, and South Korea’s Samsung Engineering together with Daewoo E&C.

The project is split into three construction packages for the gas processing unit, utilities and offsite facilities such as nitrogen, steam, power and water systems, and sulfur recovery. Some bidders are seeking only one package.

Aramco did not respond to a request for comment on Thursday. It said in its 2014 annual report, published in May this year, that the Fadhili gas plant “is on track to come on stream by 2019."

It usually takes about two months to evaluate bids for such projects after they are submitted, industry sources said.

Fadhili, together with Aramco’s other gas projects in Wasit and Midyan, are slated to add more than 5 billion standard cubic feet per day of non-associated gas processing capacity, which will help the company meet soaring domestic demand for industrial use and electricity generation in the world’s largest oil exporter.

Gas production remains a top priority for Saudi Arabia, as it wants to limit direct crude oil burning for electricity, thereby preserving its ability to increase oil exports.