Up to four leading international contractors are in the running for multiple onshore engineering, procurement and construction packages that form part of Saudi Aramco’s $110 billion Jafurah unconventional gas development project.
Multiple people with direct knowledge of the development told Upstream that Aramco has finalised a list of preferred vendors for up to five prized Jafaurah EPC packages said to be worth upwards of $5 billion.
Those said to be in pole position for prized Jafurah contracts include Indian engineering giant Larsen & Toubro (L&T), South Korea’s Samsung Engineering, Italy’s Saipem and a grouping of Hyundai Engineering and Hyundai E&C, also from South Korea, Upstream understands.
Upstream's market consultations suggest that L&T has emerged as the front runner for the first and fifth packages, Samsung is in line for package two, Hyundai for the third package, while Saipem is primed to win the fourth Jafurah package.
The five Jafurah gas projects are likely to be awarded later this year, with one person indicating that contracts could be signed as early as this month.
Aramco is yet to respond to an Upstream query on the Jafurah EPC tender process.
The Saudi government last year approved development of the giant Jafurah unconventional field, with overall investments set to reach $110 billion.
Initial development phase
The ongoing EPC packages represent the initial development phase of Jafurah and have been in the works for the past few years.
An earlier tender process covering surface facilities for the initial phase of the Jafurah development was cancelled by Aramco last December after oil demand plummeted in the wake of the coronavirus pandemic.
Aramco this year revived the tender process for the Jafurah EPC packages, buoyed by the economic impacts of the global vaccination campaign against Covid-19 and resurgent oil prices, Upstream reported.
Saudi Arabia’s Energy Minister Abdulaziz bin Salman recently said the nation also plans to use a large portion of Jafurah’s gas production to generate blue hydrogen.
Aramco has not confirmed whether these plans for hydrogen production apply to the Jafurah field development.
One well-placed person said the different phases of the Jafurah development will last between five and 10 years, and he suggested that Aramco might be inclined to build up its hydrogen infrastructure at a later stage.
Quintet on offer
Up to five key EPC projects are on offer as a part of Jafurah’s initial development phase.
In its initial phase, the gas terminal is expected to process up to 1.1 billion cubic feet per day of unconventional raw gas from nearby areas, producing sales gas, ethane, natural gas liquids and condensate.
India’s L&T has emerged as the frontrunner for the package that comprises at least three gas compression facilities.
The facilities are likely to jointly produce up to 600 million cubic feet per day of gas plus 150,000 barrels per day of condensate and NGLs.
L&T is said to have pipped other contenders including Saipem, Japan’s JGC and Hyundai for the first package.
Samsung Engineering is in pole position for the package that includes gas processing facilities with two trains, each handling about 550 MMcfd of raw gas.
The other bidders for this package included Saipem, L&T and Hyundai E&C, another person said.
A grouping of Hyundai Engineering and Hyundai E&C is well placed for the package that comprises utilities and sulphur-recovery facilities.
The duo is said to have pipped Saipem and Samsung, which were the other bidders for this package.
Saipem is leading the race for the fourth package that comprises work on upstream pipelines and tie-in systems.
In addition to package one, L&T is also expected to win the package that includes export pipelines meant for the unconventional project, another person said.
Aramco last year said it expects production from the Jafurah unconventional field to begin in early 2024, reaching 2.2 Bcfd of sales gas by 2036.
In addition, it is expected to produce about 550,000 bpd of NGLs and condensate.
Aramco says the field, which holds estimated reserves of 200 trillion cubic feet of gas, will also help meet Saudi Arabia's needs for cleaner-burning energy.
Crown Prince Mohammad bin Salman last year said: “The development of the field would earn, within 22 years from the beginning of its development, a net income for the government of about $8.6 billion and provide gross domestic product with an estimated $20 billion annually."
The Jafurah field is spread across a length of 170 kilometres and a width of 100 kilometres.
Jafurah is located between Ghawar, the world’s largest conventional onshore oilfield, and the Persian Gulf coast.