meed-logo

line1 line2 line3
SIGN IN / REGISTER

Aramco focuses on upstream capacity building

12 September 2023

This package on Saudi Arabia’s upstream sector also includes: 

> Aramco sets new deadlines for Manifa offshore bids
> Aramco gives gas plant expansion bidders more time
> Riyadh and Moscow extend oil output cuts till year-end
> Aramco receives bids for Safaniya field expansion
> Aramco selects contractors for $10bn gas project
> Development of Dorra field may stoke tensions

 

While Saudi Arabia is set to continue reducing its oil production until the end of the year, a measure that could lead to further declines in its oil revenues, the decision has not deterred state energy giant Saudi Aramco from investing in projects to build its oil and gas production potential.

On Tuesday 5 September, global benchmark Brent crude breached the $90-a-barrel mark for the first time this year, primarily due to the Opec+ alliance’s oil supply management mechanism and the kingdom’s voluntary output cuts.

Aramco is capitalising on this high oil price environment to push through projects that are critical to achieving its strategic upstream goals of raising oil production capacity to 13 million barrels a day (b/d) by 2027, from about 12 million b/d at present, and doubling gas production by the end of this decade.

The state enterprise expects its capital expenditure this year to be $45bn-$55bn, including external investments – at least 20 per cent higher than its $37.6bn capex in 2022.

Spending on offshore oil and gas engineering, procurement, construction and installation (EPCI) projects is expected to account for the bulk of this projected capex for 2023.

Robust offshore spending

Most of the kingdom’s oil and gas production comes from its offshore hydrocarbons resources in fields including Abu Safah, Arabiyah, Hasbah, Berri, Karan, Manifa, Marjan, Ribyan, Safaniya and Zuluf.

Aramco aims to maintain and gradually increase productivity at these fields, some of which are mature. In line with this, the state enterprise is poised to award approximately $4bn of offshore EPCI deals to entities in its long-term agreement (LTA) pool of offshore contractors by the end of this year.

So far this year, Aramco has already awarded about $3bn-worth of contracts as part of this projected spending.

A consortium of Indian contractor Larsen & Toubro Energy Hydrocarbon (LTEH) and UK-based Subsea7 has won seven offshore EPCI contracts from Saudi Aramco, estimated to be worth close to $2bn.

LTEH/Subsea7 won contract release and purchase order (CRPO) numbers 98, 120 and 121, which cover EPCI work on Saudi Arabia’s Zuluf, Hasbah and Manifa offshore oil and gas fields. The combined value of the three CRPOs, awarded to the consortium in March, is estimated to be $1bn.

In April, LTEH/Subsea7 won CRPOs 117, 118 and 119, which cover EPCI work on Saudi Arabia’s Marjan offshore oil and gas field development. The three tenders are thought to be worth over $900m.

The LTEH/Subsea7 consortium is also understood to have secured the contract for CRPO 97, which relates to the EPCI of various units at the Abu Safah field.

Italian contractor Saipem confirmed in early April that it had won CRPO 96, estimated to have a value of $120m. The scope of work on the tender covers the EPCI of one platform topside and the associated subsea flexible, umbilical and cable systems at the Abu Safah and Safaniya fields.

Also in April, China Offshore Oil Engineering Company (COOEC) won the CRPO 122 contract, estimated to be worth $255m, covering the installation of 13 jackets at the Safaniya field.

Saipem has also won CRPO 124, a key contract for the third gas development phase of the Marjan hydrocarbons field.

In early September, contractors in Aramco’s LTA pool of offshore service providers submitted bids for 10 EPCI packages of the Safaniya increment programme, estimated to be worth upwards of $5bn in total.

Increasing gas production

To grow its gas production potential, Aramco is tapping into the vast resources of the Jafurah unconventional gas reserve in Saudi Arabia’s Eastern Province. The Jafurah basin hosts the largest liquid-rich shale gas play in the Middle East, spread over an area measuring 17,000 square kilometres and holding an estimated 200 trillion cubic feet of gas.

Aramco awarded $10bn-worth of subsurface and engineering, procurement and construction (EPC) contracts in November 2021, marking the start of the development of the Jafurah unconventional gas field, said to be the largest non-associated gas resource base in Saudi Arabia.

As part of the next development phase, Aramco plans to build a facility with the potential to process up to 2 billion cubic feet a day (cf/d) of raw gas produced from the Jafurah field. The Jafurah second expansion phase will also include EPC of large gas compression facilities and key units for natural gas liquids (NGL) fractionation.

MEED recently reported that Aramco is close to officially awarding contracts for the five main EPC packages of the Jafurah second expansion phase, estimated to be worth $10bn combined.

Carbon capture scheme

Meanwhile, Aramco is endeavouring to make its core operations more environmentally friendly to meet its target of attaining net-zero carbon emissions by 2050 and in line with Saudi Arabia’s net-zero emissions by 2060 target.

To that end, Aramco has undertaken a project to develop a carbon capture and storage infrastructure in Saudi Arabia that will tap carbon dioxide (CO2) discharge from its gas processing plants.

The accelerated carbon capture and sequestration (ACCS) scheme aims to capture CO2 from Aramco’s northern gas plants of Wasit, Fadhili and Khursaniyah, as well as from the operations of its subsidiary Saudi Basic Industries Corporation (Sabic) and Saudi industrial gases provider Air Products Qudra.

Aramco is expected to reach a financial investment decision on the ACCS project by the end of the year. The two planned phases of the project are estimated to require a total capital expenditure of between $1.5bn and $2bn.

The ACCS project’s initial phase is expected to have a capacity of about 9 million tonnes a year, with the collection pipeline system designed to support its future expansion.

Aramco has brought on board US oil field services provider SLB (formerly Schlumberger) and Germany-headquartered Linde, the world’s largest industrial gas producer, as partners for the project’s initial phase. The second-phase partners are US-headquartered Air Products and oil field services provider Baker Hughes.

EPC works on the first phase of the ACCS project are expected to take three years, with commercial operation scheduled for 2027.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11133645/main.gif
Indrajit Sen

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • AtkinsRealis wins Expo 2030 Riyadh design deal

    13 July 2026

    Canadian engineering firm AtkinsRealis has won a contract to deliver lead design services for the Place & Planet Pavilion at the Expo 2030 Riyadh site.

    The contract was awarded by Expo 2030 Riyadh Company (ERC), which is tasked with delivering the Expo 2030 Riyadh venue.

    AtkinsRealis will deliver the full architectural and engineering design for the pavilion, coordinate all relevant design disciplines and embed sustainable design principles throughout.

    The Place & Planet Pavilion is anticipated to be a key attraction at Expo 2030 Riyadh.

    The latest development follows ERC tendering a contract to build the Saudi Arabia pavilion at the site.

    The pavilion is a major asset located within the KSA District on the eastern side of the Expo 2030 Riyadh masterplan, within the Loop of Nations district.

    The tendering of the pavilion structure followed swift progress on the site’s infrastructure development works.

    In April, ERC awarded two contracts for the next phase of infrastructure works at the site to local firm Al-Yamama Company.

    The scope covers the construction of road networks and infrastructure for water, sewage, electricity, telecommunications and electric vehicle charging.

    These awards followed ERC’s January award of an estimated SR1bn ($267m) contract for initial infrastructure works at the site to local firm Nesma & Partners. That scope covers about 50 kilometres of integrated infrastructure networks, including internal roads and utilities such as water, sewage, electrical and communication systems and electric vehicle charging stations.

    The overall infrastructure works – covering the construction of main utilities and civil works at Expo 2030 Riyadh – are split into three packages:

    • Lot 1 covers the main utilities corridor
    • Lot 2 includes the northern cluster of the nature corridor
    • Lot 3 comprises the southern cluster of the nature corridor 

    The masterplan encompasses an area of 6 square kilometres, making it one of the largest sites designated for a World Expo event. Situated to the north of the Saudi capital, the site will be located near the future King Salman International airport, and will provide direct access to various landmarks within Riyadh.

    The Public Investment Fund, Saudi Arabia’s sovereign wealth vehicle, launched ERC – a wholly owned subsidiary – in June 2025 to build and operate facilities for Expo 2030.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17642053/main.jpg
    Yasir Iqbal
  • Conflict fails to dent Saudi Arabia’s A+ rating

    13 July 2026

    Ratings agency Fitch has affirmed Saudi Arabia's long-term foreign-currency issuer default rating at A+ with a stable outlook, citing fiscal and external balance sheets that remain significantly stronger than those of similarly rated peers.

    In a rating action published on 10 July, Fitch said the kingdom's economy and public finances had proved resilient to the US-Iran war, supported by significant fiscal buffers in the form of deposits and other public-sector assets. Oil dependence and governance scores had improved but remained weaknesses, while geopolitical risk stayed high.

    A deal allowing a ceasefire and the reopening of the Strait of Hormuz is broadly in place, although Fitch warns that flare-ups highlight risks to its near-term sustainability. The agency says further US or Israeli military action against Iran remains quite likely. It expects the reopening of the strait to return the oil market to oversupply, pulling Brent down to an average of $60 a barrel in 2028 from $87 a barrel in 2026.

    Fitch forecasts real GDP growth will slow to 0.6% in 2026, hit by disruption to trade during the closure of the strait. Flows through the East-West pipeline support oil production during the war, but output at an annual average of 9 million barrels a day will sit below the 2025 level.

    Growth is expected to rebound in 2027 as flows normalise, before easing to 2.9% in 2028, supported by the phased opening of gigaprojects and guidance that sovereign wealth vehicle the Public Investment Fund will keep domestic spending largely unchanged.

    The fiscal deficit is projected to narrow in 2026 as higher oil prices offset lower volumes, before widening to 4.7% in 2027 on a fiscal breakeven oil price of $94 a barrel. Fitch projects government debt will rise to 41.3% of GDP by the end of 2028, from 31.8% at the end of 2025, above the government's guidance of a 40% ceiling.

    The agency describes the external balance sheet as healthy, with sovereign net foreign assets of 38.5% of GDP by the end of 2028. Banks have been resilient to the war, with non-performing loans at 1.1% and a Tier 1 capital ratio of 19.2% at the end of the first quarter of 2026.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17644782/main.gif
    Colin Foreman
  • KBR re-evaluates design for Libya oil project

    10 July 2026

     

    US-headquartered KBR is responsible for re-evaluating the front-end engineering and design (feed) for the project to develop the J6 North Gialo field in Libya, according to industry sources.

    In June, MEED reported that Libya’s Waha Oil Company (WOC), a subsidiary of the state-owned National Oil Corporation (NOC), had launched a review into the tender process for the J6 North Gialo oil field development project, and that this would include re-evaluating the feed work.

    The Waha concessions are held by a consortium of Libya’s NOC, which holds 59.16%; TotalEnergies, holding 20.42%; and US-based ConocoPhillips, with 20.42%.

    They are operated by WOC, which is 100% owned by NOC.

    KBR has previously provided engineering services for major national projects in Libya, such as the Great Man-Made River project, which is widely recognised as the largest irrigation project in the world.

    In March, KBR was awarded a contract by Zallaf Exploration, Production & Refining of Oil & Gas Company to provide project management and technical services for the South Refinery project in Libya’s southern city of Ubari.

    Under the terms of the contract, KBR will provide contract management, project management and supporting technical services throughout the engineering, procurement and construction (EPC) phases of the project.

    The EPC work is expected to be executed over a 50-month period.

    In its statement, KBR said that the project is aligned with its “long-standing commitment to advancing vital oil and gas infrastructure in Libya”.

    In March, MEED reported that South Korea’s Daewoo had pulled out of the tender process for Libya’s J6 North Gialo oil field development project.

    Daewoo had formed a partnership with Egypt’s Petrojet to participate in the tender process.

    The only other company to submit a bid for the project was UK-based Petrofac, which filed for administration in October last year.

    In January, TotalEnergies signed an agreement extending the Waha concessions agreement up to 31 December 2050.

    This agreement set new fiscal terms, allowing an increase in the production of these concessions that were, at the time, producing about 370,000 barrels of oil equivalent a day (boe/d).

    In January, TotalEnergies said that the deal paved the way for “a new phase of investments, including the development of the North Gialo field, which is expected to add 100,000 boe/d of production”.

    The J6 North Gialo project is the first of three field development projects that WOC has prioritised.

    The other two are known as NC98 and Gialo 3.

    Together, the three projects are expected to double Waha’s production from about 300,000 barrels a day (b/d) of oil to 600,000 b/d.

    The Waha concession covers 13 million acres.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17621475/main.jpg
    Wil Crisp
  • Qiddiya to tender high-speed rail in September

    10 July 2026

     

    Saudi Arabia’s Royal Commission for Riyadh City, in collaboration with Qiddiya Investment Company and the National Centre for Privatisation & PPP, are expected to float the tender in September for the Qiddiya high-speed rail project in Riyadh.

    MEED understands that the clarification process is ongoing for the engineering, procurement, construction and financing (EPCF), as well as the public-private partnership (PPP) packages.

    The Qiddiya high-speed rail project, also known as Q-Express, will cover 84 kilometres, connecting King Salman International airport and King Abdullah Financial District with Qiddiya City.

    In April, MEED exclusively reported that the clients had received prequalification statements from firms for the EPCF package of the project.

    MEED also reported in May that firms were forming joint ventures for the PPP package of the project.

    The line will operate at speeds of up to 250 kilometres an hour, reaching Qiddiya in 30 minutes.

    There are five stations planned: Qiddiya Grand Central Station, Qiddiya Uptown Station, King Abdullah Financial District, Terminal 6 King Salman International airport (KSIA) and Iconic Terminal at KSIA.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17621301/main.jpg
    Yasir Iqbal
  • Middle East construction cost inflation to hit 5.1% by 2027

    9 July 2026

    Construction cost inflation in the Middle East is forecast to reach 5.1% in 2027, the second-highest of any region worldwide, as global demand for data centres tightens contractor capacity and deepens shortages of skilled labour.

    The projection comes from the Global Construction Market Intelligence report, published by UK programme manager Turner & Townsend. The report draws on data from 112 markets across 44 countries, gathered between 2 March and 20 March 2026.

    Only Africa is expected to see steeper cost escalation, at 7%. Australia and New Zealand follow the Middle East at 4.9%, while the EU records the lowest figure at 2.8%. Globally, construction cost inflation is set to rise from 4.2% in 2025 to 4.5% in 2026 before flattening in 2027.

    The report identifies a two-speed market. Data centres are now the most in-demand construction sector globally, followed by industrial and logistics. More than 70% of the 112 markets surveyed report tightening or overstretched contractor capacity in the data centre sector. By contrast, more than 79% of markets show balanced or spare capacity across hospitality and leisure, residential and commercial development.

    Skills shortage

    Labour availability has displaced material costs as the primary driver of cost escalation. About 71% of markets report labour shortages. Skills deficits are most acute in mechanical, electrical and plumbing (MEP) trades, with 87% of markets reporting MEP shortages. These trades are central to data centre delivery.

    The findings carry weight for the GCC, where sovereign programmes in Saudi Arabia and the UAE are competing for the same contractor pools that artificial intelligence (AI) infrastructure now draws on. Regional governments have announced large data centre commitments alongside gigaprojects, housing and transport schemes, placing further strain on an already stretched supply chain.

    Turner & Townsend says that construction input costs have stabilised over the past year, with supply chain resilience built since the pandemic limiting the impact of recent volatility. Cost drivers are becoming more localised and sector-specific rather than the product of international shocks.

    Energy market exposure introduces a separate risk. The report cites oil prices, higher transport and freight costs, and volatility in petrochemicals inputs as significant challenges. Disruption to shipping routes lengthens lead times and adds supply chain volatility.

    Conflict assumptions

    The baseline scenario assumes a relatively short-lived conflict in the Middle East and a moderate rise in energy commodity prices in 2026. A prolonged or escalating conflict would produce more pronounced effects on inflation, supply chains and construction costs.

    New York remains the world's most expensive construction market at $7,938 a square metre, followed by San Francisco at $7,883 and Geneva at $6,985. London ranks fifth at $6,032.

    North America carries the highest regional labour costs, with an average hourly wage of $79.5, ahead of the EU at $75.6 and Australia and New Zealand at $68.

    Digital adoption remains uneven, though momentum is building. Sixty-six percent of markets report that AI capability now carries more weight in tendering and client discussions than it did 12 months ago.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17606750/main.gif
    Colin Foreman