Saudi Aramco to Award Deals on $6.9B Gas Devt Projects

DUBAI (Dow Jones Newswires), Sept. 1, 2009

Saudi Arabian Oil Co. may award two contracts this month to help implement gas projects worth up to $6.9 billion to meet soaring demand for gas in the Middle East's largest economy, people familiar with the plans said.

Several international contractors are vying to provide project management and early engineering on the projects at the onshore site of the Manifa offshore oil field and at the Shaybah oil field in the Empty Quarter desert, the persons said.

The projects, the Manifa gas development program and the Shaybah natural gas liquids, or NGL, program, are estimated to be worth close to $7 billion.

"The projects are aimed at increasing gas output, they are huge," an official at one of the companies bidding for the contracts said. Aramco officials weren't immediately able to comment when called.

Gas demand is rising rapidly in Saudi Arabia driven by increased requirements from the petrochemicals and industrial sectors. The kingdom has the world's fourth-largest proven gas reserves at 267 trillion cubic feet. Aramco's Manifa and Shaybah programs are part of the kingdom's plans to secure additional gas resources to meet these rising needs.

Companies that submitted bids for the two contracts on Aug. 22 include Fluor Corp. (FLR), Foster Wheeler Ltd. (FWLT), SNC-Lavalin Group Inc. (SNC.T) and Technip S.A. (TEC.FR), the people said.

The successful bidders will carry out the so-called front-end engineering design, or FEED, services and manage construction of the two projects.

The Manifa gas development program covers construction of new onshore facilities with capacity to produce 750 million cubic feet a day of sales gas and 1,700 tons a day of sulfur or, under a second scenario, the expansion and upgrade of existing gas processing facilities. Contractors say Aramco has yet to decide on which of the scenarios to implement.

The facilities will process non-associated gas sourced from the offshore Arabiya gas field discovered in 2008.

The Shaybah NGL program, the larger of the two schemes, involves installation of an NGL recovery facility, the debottlenecking of existing gas-oil separation facilities and the installation of facilities at the Berri gas plant to handle the NGLs from the recovery facility.

Aramco is expected to invite contractors to bid for the main engineering, procurement and construction, or EPC, contracts to build the facilities on both projects around mid-2010 once FEED services are completed, the people said. The facilities are set to be operational in 2014.  

Copyright (c) 2009 Dow Jones & Company, Inc.

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