With Saudi Aramco expected to remain the world's largest oil exporter for many years to come and Saudi Basic Industries Corporation (Sabic) the Middle East's largest petrochemical producer, continuing its expansion programmes, opportunities abound in the Kingdom for British firms.
Saudi Aramco has ambitious exploration and development plans, including drilling new wells and the three gas Core Ventures, terms for which are currently being negotiated between the Saudi government and international oil companies (IOCs), in which some $25 billion will be spent on developing Saudi Arabia's gas and building and operating power and water plants.
New gasfields are being discovered on a regular basis and ongoing projects to build gas processing plants at Hawiyah and Haradh will necessitate an expanded gas network, with some 3,000 km of pipeline expected to be added by 2006.
It is estimated that Saudi Aramco imports nearly $100 million-worth of goods and services from British companies every year. AMEC is nearing completion of a $400 million project to build an ethane recovery unit at Berri Gas Plant, and Foster Wheeler (mostly out of UK) was awarded the front end engineering and design (FEED)/project management consultant (PMC) contract for both the substantial Qatif field development and the Haradh gas plant project. Foster Wheeler is also preparing the FEED, and will be project manager for, the $200 million Al Rajhi linear alkyl benzene (LAB) project in Jubail.
Last October, a senior Saudi Aramco team visited the UK for a series of meetings with UK industry and government, organised by Trade Partners UK. This successful initiative has identified a number of areas where British companies and organisations can work with Saudi Aramco, notably supply chain management, training and education, cost reduction/loss prevention, risk assessment, and pipeline integrity.
Saudi Aramco has always been keen to hear from new companies offering innovative products and technologies, and other niche areas for British companies to consider include specialist consultancies, environmental technology and equipment, and e-commerce products.
When AMEC was first awarded the Berri Gas Plant project, subcontractors and suppliers from around the world were beating a path to its UK offices. UK companies should similarly be tracking contract awards, and offering their products and services to the successful bidders on major projects.
The following examples demonstrate the scale and type of contracts that are being let by Saudi Aramco. They also clearly show that, contrary to some perceptions, Saudi Aramco is not the sole preserve of US companies. It is in fact keen to do business with companies from around the world who are committed and, of course, competitive.
Five lump sum turnkey contracts totalling an estimated $1.2 billion, were signed on March 3 for the Qatif incremental oil and associated gas project. Due for completion in 2005, this project will add an estimated 800,000 barrels per day (bpd) to oil capacity (500,000 bpd of Arabian Light crude from Qatif and 300,000 bpd of Arabian Medium crude from Abu Safah), increase existing gas-handling capacity at Berri and expand the pipeline network in the Eastern Province. In addition, sone 330 million cu ft per day of associated gas will be produced at Qatif and 40 million cu ft per day at Abu Safah.
Snamprogetti (Italy) was awarded the $630 million contract to construct the 500,000 bpd Qatif 1 gas/oil separation plant (GOSP) and the 300,000 bpd Abu Safah GOSP, which includes the supply and installation of gas treatment and stabilisation units and power units.
Technip-Coflexip (France) was awarded the $360 million contract to expand the Berri gas plant to accommodate sour gas from Qatif. Technip will supply and install a range of new units, including a low-pressure gas sweetening unit, two new sulphur recovery units and a new feed gas compressor. The contract also includes the revamp and expansion of the existing propane refrigeration unit, the upgrade on inlet and flare facilities, the expansion of current utilities and the construction of additional sulphur storage units.
CBI Arabia (part of the US' Chicago Bridge & Iron Company, CBI) was awarded the $105 million second GOSP package. This involves the construction of a 200,000 bpd GOSP at Qatif South and also includes the construction of a gas-gathering and compression plant, a water injection plant and associated facilities. Oil from the GOSP will be processed at a dehydrogenation unit within the larger of Snamprogetti's GOSPs.
Suedrohrbau (Netherlands) was awarded the $53 million pipeline package.
Contracting & Construction Enterprises (CCE) (Saudi Arabia) was awarded the $36 million contract to construct support facilities.
Construction of Saudi Aramco's Haradh Gas Plant is more than 50 per cent complete and is scheduled to come onstream by August/September next year. The plant is expected to deliver 1.5 billion cu ft of gas per day to Saudi Aramco's sales-gas system by processing sweet (low sulphur) and sour (high sulphur) gas from the nearby Wudayhi, Waqar, Tinat, Ghaza and Haradh fields.
The new Hawiyah gas production facility started production late last year and is supplying approximately 30 per cent of the Kingdom's gas needs. Preliminary levels of production were 260 million cu ft per day. At full capacity it will produce 4.1 billion cu ft per day.
In April, Al Khafji Joint Operations (KJO), Aramco Gulf Operations Company (AGOC) and Arabian Oil Company Ltd (AOC) invited contractors to prequalify for the Project Management Consultancy Services at Al Khafji. The program involves engineering, tendering, construction and commissioning of new facilities to replace the existing KJO facilities.
Technip-Coflexip was awarded the $80 to $100 million contract to increase the sulphur recovery capacity at Saudi Aramco's Riyadh Refinery. This is the second engineering, procurement and construction contract awarded to Technip in the past two months.
In April this year, the Saudi Arabian General Investment Authority (Sagia) announced that it had issued three industrial licences for a world-scale petrochemical project to be built in Jubail Industrial City by a newly established US-Saudi J/V: Jubail Chevron Phillips. The project will cost more than $1 billion, including the expansion of the group's existing plant in Jubail. The new venture is anticipated to start production of benzene, styrene, ethyl benzene and propylene in the second half of 2006.
The Al Zamil Group a major shareholder in Saudi International Petrochemical Company (SIPC), is also focusing on the petrochemicals sector, with the following projects under way and expected to come onstream in 2004:
- 850,000 tonnes per year (tpy) methanol joint venture formed in March this year between SIPC and a Japanese consortium to built the methanol plant
- 250,000 tpy acetic acid facility
- 275,000 tpy vinyl acetate monomer (VAM)
- 50,000 tpy maleic anhydride/butanediol (MAN/BDO) - a project under the British Offset programme
In addition Al Zamil is currently in negotiations with a foreign partner to build a carbon black plant with a capacity of 20,000 tpy on a designated site in Jubail.
In the summer of 2000 a new Sabic subsidiary was formed: Jubail United Petrochemicals Company (JUPC) which is now in the process of constructing a large olefins complex, comprising the following:
- one million tpy ethylene: a consortium headed up by Halliburton was awarded the estimated $350 million engineering, procurement and construction contracted last November.
- 460,000 tpy ethylene glycol: Toyo has been appointed main contractor
- 150,000 tpy alpha olefins: licensors appointed for the linear alpha olefin unit
Other projects to note:
Both Al Zamil and Kanoo are currently in discussions with UOP for the construction of propane dehydrogenation plants, each with an estimated capacity of 350,000 tpy.
Al Rajhi International Contracting (ARIC) appointed Foster Wheeler in February this year to carry out the FEED and PMC for its proposed normal paraffin plant (estimated capacity: 120,000 tpy) and its linear alkyl benzene (LAB) plant (estimated capacity: 70,000 tpy).
In February this year, Technip-Coflexip was awarded a $70 million contract by Sabic for an acetic acid plant (30,000 tpy) in Yanbu.
Saudi Polyolefins Company: 455,000 tpy propylene/450,000 tpy polypropylene. Awarded to ABB/Samsung and project completion is expected in 2004.
Project Management & Development Company: Currently seeking SIDF funding for an amines complex with expected capacity of: 100,000 tpy ethylene oxide, 150,000 tpy ethanol oxide and 50,000 tpy methylamine. Feedstock agreement already secured with Sabic and Saudi Aramco.
And finally, as part of the gas initiative with the IOCs, opportunities exist for two ethane crackers with a capacity of approximately one million tpy each to be built as part of Core Venture 1 (South Ghawar). A similar sized ethane cracker is also proposed as part of Core Venture 2 (Red Sea).
As can be seen from the above, many British companies are already doing excellent business with Saudi Aramco and Sabic, but there is scope to do much more, and plenty of room for new British products and services.
Trade Partners UK says it can help in many ways to explore the potential and develop business. This includes general market information on doing business in Saudi Arabia, details of specific projects, introductions to major contractors, agents, and end users, in the oil/gas/petrochemical sector, financial and practical support towards visiting the market on sponsored missions; and practical help ''on the ground'' from the British Embassy's British Trade Office in Al Khobar.
All suppliers to Saudi Aramco must go through an approval system which can be a lengthy process. Advice on the steps to be taken are available from Trade Partners UK or the British Trade Office. With the right advice, a good local partner, and a new/innovative product or service that is in demand, the timescales can be shortened considerably.
