Saudi Aramco awards seven contracts for refinery

Ben Roberts , July 29th, 2010

Saudi Aramco yesterday awarded seven contracts for engineering, procurement and construction of its planned refinery in Yanbu as part of its drive to boost capacity.

The state-owned giant awarded key contracts to Korean firm SK Engineering & Construction, Tecnicas and Daelim among others for the 400,000 barrel-per-day ‘grassroots’ refinery that is part of the company’s plans to increase total capacity by 1.5 million bpd over three new downstream projects to meet domestic demand.

Tecnicas Reunidas, a Spanish firm, won a contract of around SR2.88 billion to build a coker. SK Engineering & Construction Company, which has four sites in the country will develop a crude production line, while Daelim is to build gasoline and hydrocracker facilities.

Other contractors include Saudi Services, which will provide high voltage electrical work; Dayim Punj Lloyd, which will work on offsite pipelines; Rajeh H Al-Marri, which has been mandated for the onsite pipeline relocation; and Egypt’s ENPPI, which will produce a tank farm.

The 5,200km² project has been estimated at between US$10-12 billion by Banque Saudi Fransi chief economist , John Sfakianakis, reported by Bloomberg in April.

Countries rich in oil and gas have become increasingly attractive to GCC and international contractors alike due to the three-fold attributes of growing populations, the need for infrastructure development and typical government support.

Ziad Makhzoumi, chief financial officer at Arabtec Holdings, the Dubai-based diversified group that includes Arabtec Construction, told CW: “Governments have to spend on building infrastructure, so in theory, the bigger chunk of development is infrastructure and coming from the government, and that will continue to be the case in these oil and gas producing countries where the government is the owner of that revenue and they are the spender of that money.”