Aramco spending lifts Saudi upstream market
16 September 2024
Saudi Aramco’s profits in the second quarter and first half of 2024 may have slid on a year-on-year basis, but that has not impacted the company’s capital expenditure (capex). Project spending, on the contrary, has spiked sharply.
Capex rose to $12.13bn in the second quarter from $10.46bn in the same period last year. Second-quarter capex also increased from the first quarter, during which Aramco spent $10.83bn. In the first half of the year, the company’s spending increased to $22.96bn, compared to $19.20bn in the first half of 2023, Aramco said.
Aramco has demonstrated robust capex so far this year on major projects that are critical to its strategic upstream goals of maintaining oil production potential at 12 million barrels a day (b/d) and raising gas production by 60% by 2030, with 2021 as its baseline.
Robust offshore spending
In late January, the Saudi Energy Ministry directed Aramco to abandon its campaign to expand its oil production spare capacity from 12 million b/d to 13 million b/d by 2027. As a direct consequence of that government decision, Aramco cancelled the tendering process for at least 15 tenders involving engineering, procurement, construction and installation (EPCI) of structures at key offshore oil and gas fields.
Since that decision, however, Aramco has gone the other way. The Saudi energy giant has already spent an estimated $4bn-$4.5bn year-to-date on offshore EPCI contracts, known in the Aramco ecosystem as Contracts Release and Purchase Orders (CRPOs).
Italian contractor Saipem has been the biggest beneficiary of this robust offshore spending by Aramco, winning all of the CRPOs awarded so far this year.
In early May, Aramco awarded Saipem the contract for CRPO 143, which involves replacing an oil line between the Berri and Manifa oil fields in the kingdom’s Gulf waters.
Aramco then awarded Saipem the contract for CRPO 138, which involves laying a trunkline at the Abu Safah offshore field. The contract is estimated to be worth $500m.
The Milan-listed contractor then scooped three major CRPOs in August, starting with CRPOs 132 and 139, whose combined value is estimated to be about $1bn. The scope of work for the two contracts involves the EPCI of structures to upgrade the Marjan, Zuluf and Safaniya offshore field developments, respectively.
Just days after awarding CRPOs 132 and 139 to Saipem, Aramco awarded the Italian contractor CRPO 127, worth an estimated $2bn-$2.5bn. It involves EPCI works for several structures at the Marjan field development.
Offshore jobs under bidding
Meanwhile, offshore service providers in Aramco’s Long-Term Agreement (LTA) pool of contractors are preparing bids for eight more CRPOs.
Aramco had issued a fresh batch of four tenders – CRPOs 149, 150, 152 and 153 – which cover the EPCI works on Saudi Arabia’s Abu Safah, Arabiyah, Hasbah and Marjan offshore oil field developments.
Prior to those four tenders, Aramco issued four other tenders in May to its LTA contractors as part of a project to further expand the Zuluf offshore field development. The main objective of the project is to install several structures at the Zuluf field to maintain and raise its long-term oil and gas production potential. The combined value of CRPOs 145, 146, 147 and 148 is estimated to be about $4bn. LTA contractors were initially due to submit bids for the four tenders by 22 August, but Aramco eventually extended the deadline until 17 October.
Prioritising gas production
Saudi Aramco has registered swift progress this year with the successive expansion phases of its programme to produce and process gas from the 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 cubic feet a day (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.
Within weeks of those awards, a consortium of Spanish contractor Tecnicas Reunidas and China’s Sinopec Group announced that Aramco had selected it for EPC works on the third expansion phase, worth $2.24bn. The EPC scope of work mainly entails building three gas compression plants, each capable of processing 200 million cf/d.
Also in July, Aramco issued the main EPC tender for the fourth expansion phase. Contractors are preparing bids for the project, whose scope of work is similar to that of the third expansion phase and is, hence, understood to be of similar value.
Aramco said last year that it expected its total capex in 2024 to be in the range of $48bn to $58bn. As the first eight months of the year have demonstrated, far from witnessing a slump in capex, 2024 may well turn out to be a record year for Aramco’s project spending.
Looking beyond 2024, Amin Nasser, Aramco’s president and CEO, told MEED in May that he expects his company to ramp up capex in the next two years as it strives to achieve its strategic 2030 goals. This capex guidance indicates that Aramco’s spending boom on oil production and gas production capacity expansion projects could extend into 2026.
Register for MEED's guest program now to access this article.
Exclusive from Meed
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Oman’s Barka 5 IWP solar plant begins full operations1 May 2026
Spain’s GS Inima has begun permanent operations at the solar photovoltaic (PV) plant serving the Barka 5 independent water project (IWP) in Oman.
The solar facility is the third of its kind in Oman to power a large-scale desalination facility through a self-supply model.
In a statement, GS Inima said it will provide up to 50% of the desalination plant’s electricity needs during daytime operations, improving efficiency and reducing reliance on external power sources.
The PV plant has an installed capacity of 6.5MWp. It is designed to optimise energy consumption at the adjacent reverse osmosis desalination facility.
The project was developed by GS Inima in collaboration with local firm Nafath Renewable Energy as the engineering, procurement and construction (EPC) contractor. China-based OCA Global provided owner’s engineering services.
The Barka 5 IWP has a desalination capacity of approximately 100,000 cubic metres a day.
GS Inima won the contract to develop the Barka 5 IWP project in November 2020. As previously reported, financial close was reached in 2022, and construction of the facility was completed in 2024.
The self-supply solar PV plant is equipped with 10,504 bifacial modules supplied by China’s Jinko Solar. These are mounted on fixed structures provided by Mibet Energy.
Power is managed through 18 Sungrow inverters with a total capacity of 320kWac each, while electricity is fed into the desalination plant through an 11kV connection.
The integration of solar power supports the efficiency of the Barka 5 facility, which has an energy consumption rate of 2.7kWh per cubic metre.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16645971/main.jpg -
Qiddiya receives high-speed rail PPP prequalifications1 May 2026
Register for MEED’s 14-day trial access
Saudi Arabia’s Royal Commission for Riyadh City, in collaboration with Qiddiya Investment Company (QIC) and the National Centre for Privatisation & PPP, received prequalification statements from firms on 30 April for the public-private partnership (PPP) package of the Qiddiya high-speed rail project in Riyadh.
This follows the submission of prequalification statements for the engineering, procurement, construction and financing (EPCF) package on 16 April, as reported by MEED.
The prequalification notice was issued on 19 January, and a project briefing session was held on 23 February at Qiddiya Entertainment City.
The Qiddiya high-speed rail project, also known as Q-Express, will connect King Salman International airport and the King Abdullah Financial District (KAFD) with Qiddiya City. The line will operate at speeds of up to 250 kilometres an hour, reaching Qiddiya in 30 minutes.
The line is expected to be developed in two phases. The first phase will connect Qiddiya with KAFD and King Khalid International airport.
The second phase will start from a development known as the North Pole and travel to the New Murabba development, King Salman Park, central Riyadh and Industrial City in the south of the city.
In November last year, MEED reported that more than 145 local and international companies had expressed interest in developing the project, including 68 contracting companies, 23 design and project management consultants, 16 investment firms, 12 rail operators, 10 rolling stock providers and 16 other services firms.
In November 2023, MEED reported that French consultant Egis had been appointed as the technical adviser for the project. UK-based consultancy Ernst & Young is acting as the transaction adviser, and Ashurst is the legal adviser.
Qiddiya is one of Saudi Arabia’s five official gigaprojects and covers a total area of 376 square kilometres (sq km), with 223 sq km of developed land.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16641057/main.gif -
Bid deadline extensions hint at tighter project market1 May 2026
Commentary
Mark Dowdall
Power & water editorThere has been a steady run of bid deadline extensions across major power and water projects in recent weeks.
The latest is the Al-Dibdibah and Al-Shagaya solar independent power producer (IPP) plant in Kuwait, where the submission date has been moved again to 31 May, following an earlier shift from February to the end of April. Similarly, bidding for the first phase of the Al-Khairan IWPP has also been extended.
In Bahrain, bidding for the 1.2GW Sitra IWPP has been pushed back by another month to 17 May, having already been under main contract tender since last August.
Meanwhile, in Dubai, contractors have been given additional time to submit bids for both the Jebel Ali sewage treatment plant expansion and a dams rehabilitation project in Hatta.
Individually, these shifts are not unusual, and extensions are a routine part of the procurement cycle, especially with large, capital-intensive schemes.
However, amid regional tensions and increasingly complex risk profiles, stakeholders are having to weigh up how much they can absorb, whether that is performance guarantees, financing exposure or delivery risk.
For contractors and developers, this could mean looking more closely at supply chains, insurance costs and the potential for disruption. Lenders, too, are likely taking a more measured view on long-term exposure.
This caution can show up in the bid process. More internal approvals, more conservative pricing, and in some cases, perhaps a hesitation to commit altogether.
At the same time, strong pipelines across the GCC mean contractors are not short of work. Firms can afford to be selective, focusing on projects where risk and return are better aligned.
Clients, in turn, face a choice. Push ahead with more limited competition or extend and try to draw in stronger participation. Most appear to be opting for the latter.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16640998/main.jpg -
Saudi Arabia launches $2bn Jawharat Al-Arous project1 May 2026
Saudi Arabia has launched Jawharat Al-Arous, an SR8bn ($2bn) private-sector-led residential development in north Jeddah.
The scheme covers 107 million square metres and comprises 18 residential neighbourhoods planned to accommodate more than 700,000 residents. It will provide more than 80,000 residential and commercial plots.
The masterplan also includes 41 government-backed infrastructure and service zones to support large-scale urban expansion.
The project was unveiled by Mecca Region Governor Khalid Al-Faisal and will be overseen by Saud Bin Mishaal Bin Abdulaziz.
According to a recent report by real estate firm Cavendish Maxwell, Jeddah’s residential stock stood at about 1.09 million units at the end of 2025, following the completion of around 4,000 units that year.
An expanding pipeline of about 18,000 units in 2026 and 22,000 units in 2027 is expected to bring total stock to around 1.14 million units by 2027, gradually adding supply without destabilising market equilibrium.
GlobalData expects the Saudi construction industry to grow by 3.6% in real terms in 2026, supported by increased foreign direct investment (FDI) and investment in the housing and manufacturing sectors.
The residential construction sector is forecast to grow by 3.8% in real terms in 2026 and to record an average annual growth rate of 4.7% between 2027 and 2030, supported by Saudi Vision 2030’s goal of increasing homeownership from 65.4% in 2024 to 70% by 2030, including through the delivery of 600,000 homes by 2030.
MEED’s April 2026 report on Saudi Arabia includes:
> COMMENT: Risk accelerates Saudi spending shift
> GVT &: ECONOMY: Riyadh navigates a changed landscape
> BANKING: Testing times for Saudi banks
> UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
> DOWNSTREAM: Saudi downstream projects market enters lean period
> POWER: Wind power gathers pace in Saudi Arabia
> WATER: Sharakat plan signals next phase of Saudi water expansion
> CONSTRUCTION: Saudi construction enters a period of strategic readjustment
> TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure pushTo see previous issues of MEED Business Review, please click herehttps://image.digitalinsightresearch.in/uploads/NewsArticle/16640863/main.png -
Damage to US bases in region expected to cost more than $15bn1 May 2026
The $25bn estimate a Pentagon official gave US lawmakers on 29 April did not include the cost of repairing damage to US bases in the Middle East, and the real cost of the war is likely to be between $40bn and $50bn, according to CNN.
That would put the cost of repairing bases and replacing destroyed assets at between $15bn and $25bn.
Jules Hurst III, the Pentagon official serving as the agency’s comptroller, told the House Armed Services Committee that “most” of the $25bn he cited had been spent on munitions. Defence Secretary Pete Hegseth declined to say whether the figure included repairs to damaged US bases.
Iranian strikes across the Gulf in the early days of the war significantly damaged at least nine US military sites in 48 hours, hitting facilities in Bahrain, Kuwait, Iraq, the UAE and Qatar.
Six US servicemembers were killed in an attack on a command post in Kuwait, and 20 more were injured.
Three sources told CNN that the figure provided to the House Armed Services Committee did not include the cost of rebuilding US military installations and replacing destroyed assets.
One source said the true cost would likely be between $40bn and $50bn.
US contractors such as KBR and Fluor, as well as local firms, are likely to be among the leading contenders for contracts to repair and rebuild US bases in the region.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16638663/main.gif