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Aramco officially awards Jafurah third expansion phase contract

2 October 2024

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Saudi Aramco has officially awarded the main contract for engineering, procurement and construction (EPC) works on the third expansion phase of its Jafurah unconventional gas development in Saudi Arabia.

A consortium of Spanish contractor Tecnicas Reunidas and China’s Sinopec Group has been awarded the main EPC contract for the Jafurah third expansion phase, according to sources.

Aramco issued the letter of award to the Tecnicas Reunidas/Sinopec consortium on 25 September, sources told MEED.

Tecnicas Reunidas announced in July that it had received a non-binding letter of intent from Aramco for the main EPC contract for the Jafurah third expansion phase.

In a filing with the Madrid Stock Exchange on 22 July, the Spanish contractor estimated the contract’s value at $2.24bn.

In its disclosure, Tecnicas Reunidas added that it is the leader of its consortium with Sinopec, holding a 60% stake, implying that its share of the Aramco contract could be worth $1.34bn.

The Jafurah third expansion phase project aims to increase the gas production and processing capacity of the Jafurah unconventional gas development, located in the kingdom’s Eastern Province, through the addition of new facilities.

The EPC scope of work entails building three gas compression plants, each capable of processing 200 million cubic feet a day (cf/d).

The scope of work also includes building a 230kv substation to power the new gas compression plants and installing other utilities units, piping systems and safety equipment.

In July, Tecnicas Reunidas said it expects EPC work on the Jafurah third expansion phase to be completed in 44 months, with up to 400 engineers deployed on the project.

The Spanish/Chinese consortium began executing EPC works on the project in July, soon after receiving the letter of intent from Aramco, as per sources.

The other bidders for the project’s EPC contract were India-headquartered Larsen & Toubro Energy Hydrocarbon and Japan’s JGC Corporation.

Jafurah unconventional gas programme

Aramco has registered swift progress this year with the successive, multibillion-dollar expansion phases of its programme to produce and process gas from the massive Jafurah unconventional development in Saudi Arabia.

Aramco officially awarded contracts on 30 June for the Jafurah second expansion phase, which aims to raise its processing potential to up to 2 billion cf/d of raw gas produced from the Jafurah field.

Aramco awarded 16 contracts worth about $12.4bn for EPC works and drilling services for the second expansion phase.

The Tecnicas Reunidas and Sinopec consortium’s announcement that Aramco had selected them for EPC works on the third expansion phase came within weeks of contract awards for the second expansion phase.

Also in July, Aramco issued the main EPC tender for the fourth expansion phase. Contractors are preparing bids for the project, which has a scope of work similar to the third expansion phase and is, hence, understood to be of comparable value.

ALSO READ: Robust Aramco spending lifts Saudi upstream market

In parallel, EPC works are also progressing on the first phase of the programme, for which Aramco awarded $10bn-worth of subsurface and EPC contracts in November 2021.

Located in Saudi Arabia’s Eastern Province, the Jafurah basin hosts the largest liquid-rich shale gas play in the Middle East, with an estimated 200 trillion cubic feet of gas in place. This shale play covers an area of 17,000 square kilometres.

Production and processing of gas from this giant unconventional reserve is crucial for Aramco to achieve its ambition of increasing gas production by 60% by 2030, with 2021 as its baseline.

In February 2020, Aramco received a capital expenditure grant of $110bn from the Saudi government for the long-term phased development of the Jafurah unconventional gas resource base.

With its 2030 target locked, industry sources believe Aramco has already drawn up plans for six expansion phases to develop the Jafurah basin. The next two phases, they say, could also be tendered between now and the second half of 2025.

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Indrajit Sen

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