Aramco explores PPP pathway

29 May 2024

The June 2024 Agenda package also includes:

> Riyadh reins in spending
> PPP offers budget and efficiency routes
> Opening up property sales in Saudi Arabia

 

 


At the start of this year, the Saudi Energy Ministry directed Aramco to abandon its campaign of raising maximum oil production from 12 million barrels a day (b/d) presently to 13 million b/d by 2027. The course correction, however, is expected to have little bearing on Aramco’s oil and gas project spending. 

The Saudi energy giant has already spent approximately $10.5bn on projects so far this year, following project capital expenditure (capex) of more than $23bn last year. The company’s total capex in 2024 is estimated to be in the range of $48bn to $58bn.

The command from the Saudi Energy Ministry on 30 January suggests that Aramco could be encouraged to transform itself from a spending behemoth to a magnet for project investments going forward.

In other words, the state enterprise could, increasingly, be seen exploring joint projects with foreign investors, as it ventures into new energy sectors, such as carbon capture, utilisation and storage (CCUS) and low-carbon hydrogen/ammonia.

Testing the waters

As the main engine of Saudi Arabia’s economy, Aramco has also contributed towards building social infrastructure in the kingdom. The company has been building housing facilities, hospitals and schools for decades, and has successfully implemented the public-private partnership (PPP) model for such projects.

But Aramco took its PPP agenda to the next level with the launch of the first such scheme in its main oil and gas business in 2021. The project involves modifying and upgrading sulphur recovery units (SRUs) at seven gas processing plants located in the kingdom's Eastern Province.

Under the desulphurisation programme, Aramco expects third-party investors to build large downstream tail gas treatment units to collect and process tail gas discharged from SRUs at the identified gas plants. The facilities are to be developed on a build-own-operate (BOO) or build-own-operate-transfer (BOOT) basis.

Two consortiums, led by Saudi Arabia-based Lamar Holding and Vision Invest, respectively, submitted proposals last year. Aramco is expected to pick one of the two teams this year as the developer of the desulphurisation PPP scheme.

These projects also potentially point towards a revised mandate

Separately, Aramco has also brought on board international partners – the likes of SLB, Linde, Air Products and Baker Hughes – for an ambitious, large-scale CCUS project that it initiated early last year.

The Accelerated Carbon Capture & Sequestration (ACCS) scheme will have nine phases and aims to capture 44 million tonnes a year of CO2 from Aramco’s gas processing plants. The first phase is gaining traction, with Aramco shortlisting contractors to bid for the main tender, although progress has been slow.

The desulphurisation PPP scheme and ACCS programme are examples of Aramco’s willingness to work with external players in projects related to its fundamental operations. 

These projects also potentially point towards a revised mandate for Aramco to tighten its projects purse in order to make more funds available for its main shareholder – the Public Investment Fund – to spend on Saudi Vision 2030 plans and the kingdom’s gigaprojects. 


MEED's April 2024 special report on Saudi Arabia includes:

> GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
> BANKING: Saudi lenders gear up for corporate growth
> UPSTREAM: Aramco spending drawdown to jolt oil projects
> DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector

> POWER: Riyadh to sustain power spending
> WATER: Growth inevitable for the Saudi water sector
> CONSTRUCTION: Saudi gigaprojects propel construction sector
> TRANSPORT: Saudi Arabia’s transport sector offers prospects

https://image.digitalinsightresearch.in/uploads/NewsArticle/11823775/main.gif
Indrajit Sen
Related Articles
  • Dubai plans EPC tender for Warsan sewage treatment plant

    25 February 2026

     

    Register for MEED’s 14-day trial access 

    Dubai Municipality is preparing to tender the main construction package for the Warsan sewage treatment plant (STP) by the end of the year, according to sources close to the project.

    The scheme is linked to the deep sewerage tunnels infrastructure programme being implemented by the municipality’s sewerage and recycled water projects department.

    As MEED understands, the Warsan STP had previously been expected to be procured as a public-private partnership (PPP) scheme.

    However, sources confirmed that the main construction package will now be procured as an engineering, procurement and construction (EPC) contract.

    The project involves the construction of a sewage treatment plant with a capacity of about 175,000 cubic metres a day (cm/d), including treatment units, sludge handling systems and associated infrastructure.

    The plant, estimated to cost about $326m, will be developed at the existing Warsan complex, where the municipality is also progressing separate expansion and rehabilitation packages.

    These include Warsan STP Phase 1 (DS-355/1), which involves sewerage and stormwater network upgrades, and Stage 2 of the Al-Warsan sewage treatment plant (DS-203/2), comprising new treatment units

    Kuwait-headquartered Mohammed Abdulmohsin Al-Kharafi & Sons is the main EPC contractor for both projects.

    Separately, the municipality is also progressing the expansion and upgrade of the first and second phases of the Jebel Ali STP.

    The upgraded facility will be capable of treating an additional sewage flow of 100,000 cm/d.

    Earlier this month, contractors were invited to prequalify for the contract.

    The bid submission deadline is 2 April.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15765751/main.jpg
    Mark Dowdall
  • Aramco firm and Arcapita sign logistics facility deal

    25 February 2026

    Asmo, the logistics joint venture of Saudi Aramco and DHL Supply Chain, has signed an agreement with Bahrain‑headquartered Arcapita Group Holdings to deliver a 1.4-million-square-metre (sq m) built-to-suit logistics complex at King Salman Energy Park (Spark).

    The project will feature a 43,000 sq m temperature-controlled, Grade A warehouse, more than 3,000 sq m of office and staff amenities, 5,300 sq m dedicated to chemical storage, and an open yard spanning about 1.2 million sq m.

    Planned for large-scale industrial use, the site is expected to incorporate advanced warehouse and building management systems, end-to-end digital connectivity, automation and robotics.

    It will also be developed in line with internationally recognised sustainability standards, featuring solar (photovoltaic) readiness, EV charging infrastructure and a target of LEED Gold certification.

    The development is aimed at supporting the next stage of Saudi Arabia’s logistics and supply chain expansion.

    Under the deal structure, Arcapita will provide funding and retain ownership of the asset, while Asmo will develop the facility and then lease and operate it under a 22-year occupational lease.

    According to a statement, “the scheme will be executed via a forward-funding model, underscoring a long-term commitment to national infrastructure”.

    Asmo added that this will be its first purpose-built logistics centre and one of four strategic locations planned to anchor its nationwide logistics network, aligned with the National Transport and Logistics Strategy (NTLS) under Saudi Vision 2030.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15765085/main.gif
    Yasir Iqbal
  • Algeria gives bidders more time for 1.2GW plant

    25 February 2026

    Algeria’s state-owned electricity and gas utility Sonelgaz has extended the bid submission deadline for a contract to build a 1,200MW combined-cycle gas-fired power plant in Adrar.

    The project is being procured through Sonelgaz’s power generation subsidiary, Societe Algerienne de l’Electricite et du Gaz – Production de l’Electricite (SPE).

    The new bid submission deadline is 29 April. The main contract was first tendered in April last year, and the deadline has been extended several times since.

    The latest deadline was 26 February.

    The tender is open to local and international companies with experience in delivering large-scale power generation projects and with sufficient technical and financial capacity.

    Algeria’s wider power sector has experienced periods of limited contract activity in recent years. Between 2018 and 2022, virtually no new solar or wind farm contracts were awarded, according to available data from the regional projects tracker MEED Projects.

    In 2023, Sonelgaz Energie Renouvelables, a subsidiary of Algeria’s state-owned utility, awarded 14 of the 15 solar photovoltaic (PV) packages it tendered that year.

    At the time, MEED reported that the 15 packages had a total combined capacity of 2,000MW, requiring at least AD172bn ($1.2bn) of investment.

    However, publicly available data suggests that progress has been slow with several schemes yet to reach full construction or commercial stages.

    Gas-fired combined-cycle plants continue to account for the majority of Algeria’s electricity generation capacity. Data from MEED Projects indicates that more than 5,000MW of oil- and gas-fired power capacity is currently under construction.

    Despite this, new contract awards in 2025 came from three solar schemes.

    This included the construction of a 154MW solar PV plant in Bechar, for which China Power was appointed main contractor in August.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15765079/main.jpg
    Mark Dowdall
  • Riyadh tenders Line 7 metro project management deal

    25 February 2026

     

    Register for MEED’s 14-day trial access 

    The Royal Commission for Riyadh City (RCRC) has issued a tender inviting firms to bid for a contract for project management consultancy services for the construction of Riyadh Metro Line 7.

    MEED understands that RCRC has allowed firms until March to submit their proposals.

    The latest development follows contractors submitting bids on 31 January for a contract to design and build the project.

    The project involves constructing a metro line linking the Qiddiya entertainment city development, King Abdullah International Gardens, King Salman Park, Misk City and Diriyah Gate. The total length of the line will be about 65 kilometres (km), of which 47km will be underground and 19km will be elevated.

    The line will have 19 stations, 14 of which will be built underground and five above ground.

    Riyadh Metro’s first phase features six lines with 84 stations. The RCRC completed the phased roll-out of the Riyadh Metro network when it started operating the Orange Line in January this year.

    Construction has also begun on the next phase of Riyadh Metro, the extension of Line 2.

    In July last year, MEED exclusively reported that RCRC had awarded an estimated $800m-$900m contract for the project.

    The contract was awarded to the Arriyadh New Mobility Consortium, led by Italy’s Webuild. 

    The group also includes India’s Larsen & Toubro, Saudi Arabia’s Nesma & Partners and France’s Alstom.

    Line 3, also known as the Orange Line, stretches from east to west, from Jeddah Road to the Second Eastern Ring Road, covering a total distance of 41km. 

    The line spans 8.4km, of which 1.3km is elevated and 7.1km is underground. It includes five stations – two elevated and three underground.

    It will run from the current terminus of Line 2 at King Saud University (KSU) and continue to new stations at KSU Medical City, KSU West, Diriyah East and Diriyah Central – where it will interchange with the planned Line 7 – before terminating at Diriyah South.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15764750/main.png
    Yasir Iqbal
  • Six companies prequalify for Algeria gas contract

    25 February 2026

    Register for MEED’s 14-day trial access 

    Six companies have prequalified for a contract that is part of a project to connect the liquefied natural gas (LNG) storage and loading lines of the gas complexes known as GL1Z and GL2Z, according to a statement issued by Algeria’s state-owned oil and gas company Sonatrach.

    The two complexes are part of Sonatrach’s Arzew LNG hub.

    The scope of work for the contract is focused on the execution of the basic engineering study for the project.

    The six companies that have prequalified for the project are:

    • JGC (Japan)
    • McDermott (US)
    • Synergy Engineering (Indonesia)
    • ExidaSP (UAE)
    • EPPM (Tunisia)
    • Enreco (Italy)

    In its statement, Sonatrach said: “Following the review of applications, the companies … have been prequalified and will be invited to participate and submit bids in the selective consultation.”

    The Arzew LNG hub is Algeria’s main LNG export centre, located near the port town of Arzew, about 40 kilometres east of Oran on the Mediterranean coast.

    Sonatrach is currently implementing several projects to upgrade facilities within the hub.

    In October last year, MEED revealed that the gas train known as T-300 had been brought back online at the site.

    The train was brought back online after a new main cryogenic heat exchanger (MCHE) was commissioned.

    The upgrade was part of a broader contract with US-based Honeywell to replace four MCHEs at GL1Z.

    The contract was originally signed with Air Products, and Honeywell acquired the contract when it bought Air Products’ LNG process technology and equipment business in September 2024.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15762638/main.png
    Wil Crisp