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The Safaniya offshore field ... the world’s largest

The Safaniya offshore field ... the world’s largest

Aramco issues $1bn Safaniya tender


Saudi Aramco has issued a much-anticipated tender to members of its exclusive pool of offshore engineering contractors for the next phase of redevelopment work at the massive Safaniya oilfield.

Bids are due for the engineering, procurement, construction and installation (EPCI) contract on the sixth phase of redevelopment of Safaniya – considered the world’s largest offshore oilfield with remaining reserves estimated at some 37 billion barrels, sources say.

The package – thought to be worth up to $1 billion – covers 10 jackets, nine platform decks, an electrical distribution platform, pipelines and cabling, and the removal of some obsolete facilities.

The field was first brought into production in the 1970s and is subject to an ongoing programme of redevelopment to sustain capacity at around 1.2-1.3 million barrels per day (mbpd).

The job is expected to be the most-valuable apportioned upstream by Aramco since the start of the year. The deal also comes at a time when the energy giant appears likely to negotiate more of the long-term agreements (LTAs) granting additional firms access to such contracts.

At the same time, renewed capital investment elsewhere in the region is raising demand for contractors’ services – potentially increasing prices for Aramco and adding incentive for the company to broaden competition for its own jobs.

As the only two LTA contractors until 2015, the US-based McDermott International, and to a lesser extent Italy’s Saipem, have historically carried out the bulk of the work thus far and have continued to do so since qualification was widened. The work falls under Aramco’s Maintain Potential Programme initiated last decade to sustain output levels across the company’s maturing offshore fields.

Late last year, the Italian firm won the fourth-phase redevelopment contract – which had a similar work-scope to the sixth – while its American rival was awarded the estimated $700 million fifth-phase EPCI job shortly afterwards.

However, in July 2015, the incumbents were joined by a joint venture (JV) of India’s Larsen & Toubro with Singapore’s EMAS Chiyoda and by the US’ Dynamic Industries on the LTA list. The Indian-led joint venture picked up the largest contract among work awarded last year worth in excess of $4 billion for the $1.6 billion second-phase expansion of the Hasbah non-associated gas field.

The UAE’s National Petroleum Construction Company (NPCC) joined the LTA list in October. The Emirati firm has also performed strongly since joining the prestigious group – most-recently awarded an estimated $200-250 million contract for four platforms at the Berri, Zuluf and Safaniya fields. It has extensive experience on multi-billion-dollar projects in the UAE.

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