Aramco prepares major Marjan contract award

EPCI contract for state player’s giant offshore expansion project worth possible $3.5 billion and includes at least dozen platforms

Saudi Aramco is laying the groundwork for a huge engineering, procurement, construction and installation contract on its massive Marjan offshore expansion project, an order expected to be worth at least $3.5 billion.

Industry sources told Upstream that the Saudi Arabian state-owned giant has issued initial enquiries to its select group of long-term agreement (LTA) contractors, seeking responses on how best to push ahead with this flagship project.

“They (Aramco) have issued questionnaires to LTA players and have met each of them separately,” said one market player.

Other sources familiar with Aramco’s agenda said the operator held meetings with the LTA players this month about the Marjan project, which involves a mix of offshore as well as onshore facilities.

The workscope is significant and is understood to consist of an offshore central processing facility, more than a dozen offshore platforms including several tie-in facilities, in excess of 300 kilometres of subsea pipelines and several other marine hardware packages.

Marjan’s offshore facilities are expected to be designed to handle around 300,000 barrels per day of oil and will involve more than 100 development wells.

On the onshore front, a new gas compression plant and a new crude processing train at Tanajib is also envisaged.

Initial queries from Aramco are thought to focus on the offshore workscope.

“The project is still at an early stage and we will have to wait for clarity on the packages involved,” reckoned one market watcher.

The scale of the project will call for a large number of engineering man hours. “They are looking to move to the EPC stage and the (successful) contractor will be responsible for a lot of engineering work,” one source said.

The bidding exercise for Marjan could start later this year, although some sources cited the first quarter of 2018 as a more likely time for the tender effort to formally begin.

US-based contractors McDermott and Dynamic Industries, Italy’s Saipem, a partnership of India’s Larsen & Toubro (L&T) with Singapore’s Emas, and Abu Dhabi-based National Petroleum Construction Company (NPCC) are the LTA contractors that are qualified to compete for Aramco’s offshore projects.

However, one project tracker claimed that Aramco might also involve other contractors, outside the LTA group, because of the project’s sheer size.

In addition to the Marjan project, Aramco is also believed to be eyeing the expansion of its Berri offshore oilfield that could involve boosting its production capacity by more than 200,000 bpd, sources have suggested. The Saudi behemoth has invited companies to bid for several packages involving front-end engineering and design work on the Berri expansion project, which could cost about $6 billion, Reuters reported this month, quoting anonymous sources.

Aramco chief executive Amin Nasser said in January that the company is working on increasing its oil and gas production capacity to meet future demand growth.

Saudi oil officials have not, however, indicated any immediate plans to increase the kingdom’s overall capacity of 12.5 million bpd, the report added.