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L&T announces Jafurah fourth expansion phase contract award

24 August 2026

 

Indian contracting conglomerate Larsen & Toubro (L&T) has announced that its subsidiary, L&T Energy Hydrocarbon Onshore (LTEH Onshore), has won a contract to undertake a gas compression facilities project “for a prestigious client in the Middle East”.

LTEH Onshore received the letter of award during India’s 2026 financial year, which starts on 1 April, Mumbai-headquartered L&T said in a statement, describing the order as ‘ultra-mega’ – a term the company uses for contracts valued at more than INR150bn ($1.57bn).

The project involves the engineering, procurement and construction (EPC) of gas compression plants, comprising gas inlet facilities, gas compression systems, condensate and produced-water handling systems, propane refrigeration systems and all associated utilities, L&T said in its statement on 24 August.

“The facilities will be developed for new onshore installations to process sour gas in compliance with applicable client standards, codes and project requirements,” the Bombay Stock Exchange-listed company said.

To meet the power requirements of the gas compression plants, L&T’s Power Transmission & Distribution business will execute two 230kV extra-high-voltage substations, L&T added.

MEED understands that the contract award relates to the fourth expansion phase of the Jafurah unconventional gas development in Saudi Arabia, for which Saudi Aramco selected LTEH for EPC works earlier this year.

MEED previously reported that LTEH started work on the Jafurah fourth expansion phase during the second quarter of the year, with sources estimating the contract value at around $1.5bn.

The main scope of work on the Jafurah fourth expansion phase project involves the EPC of two gas compression trains at the giant gas basin in the kingdom’s Eastern Province. Each plant will be able to process up to 200 million cubic feet a day (cf/d).

The detailed scope of work involves the EPC of the following process and utilities units at the south field of the Jafurah reserve:

  • Two gas compression trains of 200 million cf/d capacity each, measuring 400 metres by 400 metres
  • Gas compression plant inlet area
  • Gas compression plant condensate and produced-water handling
  • Instrumentation and plant air unit
  • Nitrogen generation unit
  • Raw/potable/water utilities
  • Chemical injection systems
  • Diesel systems
  • Flare and flare gas recovery systems
  • Gas compression plant burn pit
  • Closed drain system
  • Oily water system
  • Sanitary water system
  • Stormwater system
  • Firewater system
  • Fire and gas protection system
  • All buildings located within the gas compression plant, excluding security buildings
  • Outside battery limit buildings

Contractors submitted proposals for the Jafurah fourth expansion phase project by the deadline of 15 January 2025, MEED previously reported. After the bids were submitted, Aramco initially asked contractors to extend their bid validity until the end of September, as it needed more time to evaluate the proposals.

The Saudi energy giant then asked contractors to extend the validity of their base proposals until February this year, and the bidders complied, MEED reported.

Along with requesting a second bid-validity extension, Aramco also sought an alternative set of commercial proposals from contractors, sources said. Bidders submitted the second price option to the client in December, the sources added.

The following contractors are among those that are understood to have submitted bids for the Jafurah fourth expansion phase project:

  • China Petroleum Engineering & Construction
  • Larsen & Toubro Energy Hydrocarbon (India)
  • Samsung E&A (South Korea)
  • Tecnicas Reunidas (Spain) / Sinopec Group (China)

Aramco issued the main tender for the project in July 2024. Contractors invited to bid were initially set a deadline of 15 October that year to submit technical bids and their In-Kingdom Total Value Add (IKTVA) credentials. Commercial bids were due to be submitted by 31 October, with the deadline extended to 31 December, then to 15 January, 2025.

Jafurah gas development phases

The Jafurah basin is the largest liquid-rich shale gas play in the Middle East, spanning around 17,000 square kilometres. The reserve is estimated to contain 229 trillion cubic feet of gas and 75 billion stock-tank barrels of condensate.

Aramco brought the greenfield Jafurah gas processing plant online in early December, with a production capacity of 450 million cf/d, marking the commissioning of the first phase of its $100bn capital expenditure programme to produce gas from the unconventional resource base.

The Saudi oil company had earlier said it expected to start gas production at Jafurah in 2025, with the intention of progressively ramping up to 2 billion cf/d of sales gas, 420 million cf/d of ethane and 630,000 barrels a day (b/d) of high-value liquids by 2030.

Aramco has said that, at peak production, its unconventional gas programme is expected to generate electricity equivalent to displacing 500,000 b/d of oil.

Along with overseeing EPC works on the Jafurah fourth expansion phase project, Aramco is also nearing a decision on awarding the main EPC contract for the fifth expansion phase of the mammoth Jafurah unconventional gas development programme.

MEED recently reported that a frontrunner has emerged for the main EPC contract for the Jafurah fifth expansion phase, whose scope is similar to the programme’s fourth phase that has been awarded to LTEH.

Dubai-headquartered Wood Group has carried out the front-end engineering and design (feed) on the fifth expansion phase.

Progress on the fourth and fifth expansion phases of the Jafurah unconventional gas development programme continues as EPC work on the third phase advances.

In July 2024, Aramco issued a non-binding letter of intent to a consortium of Tecnicas Reunidas and Sinopec Group for the EPC contract for the Jafurah third expansion phase. The value of the contract is estimated to be $2.24bn.

The objective of the third expansion phase of Jafurah is similar to that of the fourth phase of development. The main scope of work involves the EPC of three gas compression plants, each with a capacity of 200 million cf/d.

The third phase’s 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.

The selection of contractors for the third expansion phase of the Jafurah development came within weeks of Aramco officially awarding EPC contracts for the 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 a combined total of about $12.4bn, for the second expansion phase on 30 June 2024.

The EPC scope of work on the project involves the construction of gas compression facilities and associated pipelines and the expansion of the Jafurah gas plant, including the construction of gas processing trains, utilities, sulphur and export facilities, Aramco said in a statement.

The main EPC packages of the Jafurah second expansion phase project, their estimated values and the selected contractors are:

  • Package 1 – gas processing plant and main process units – $2.9bn: Larsen & Toubro Energy Hydrocarbon (India)
  • Package 2 – utilities and offsites – $2.4bn: Hyundai Engineering (South Korea)
  • Package 3 – gas compression units – $1bn: Larsen & Toubro Energy Hydrocarbon
  • Riyas natural gas liquids (NGL) package 1 – NGL fractionation trains – $1bn: Tecnicas Reunidas / Refining & Chemical Engineering Group (part of China’s Sinopec Group)
  • Riyas NGL package 2 – utilities, storage and export facilities – $2.2bn: Tecnicas Reunidas/Refining & Chemical Engineering Group
  • Riyas NGL package 6 – site preparation works – $107m: Mofarreh Alharbi & Partners (Saudi Arabia)
  • Riyas NGL package 9 – temporary construction facilities – $80m: Mofarreh Alharbi & Partners

Aramco kickstarted EPC works on the first phase of the programme in November 2021 by awarding $10bn-worth of subsurface and EPC contracts.

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.

The Jafurah unconventional gas development programme is central to Aramco’s goal of increasing gas production capacity. The target has recently been raised to 80%, with 2021 as the baseline, up from 60%, to meet rising domestic and global demand. The company expects life-cycle investment in Jafurah to exceed $100bn.

Prior to the commissioning of the Jafurah gas plant in the last quarter of this year, Aramco completed an $11bn lease-and-leaseback deal in late October for gas processing facilities at the Jafurah unconventional gas reserve with a consortium led by funds managed by Global Infrastructure Partners (GIP), part of US asset manager BlackRock.

Under the transaction, which Aramco started in August, a newly formed subsidiary – Jafurah Midstream Gas Company (JMGC) – will lease development and usage rights to the Jafurah field gas processing plant and the Riyas natural gas liquids (NGL) fractionation facility.

After 20 years, JMGC will lease the assets back to Aramco. JMGC will collect a tariff payable by Aramco in exchange for granting Aramco the exclusive right to receive, process and treat raw gas from the Jafurah resource base.

Aramco will hold a 51% majority stake in JMGC, while the GIP-led consortium will hold the remaining 49%. Investors participating in the GIP-led consortium include Hassana Investment Company, The Arab Energy Fund (TAEF) and Aberdeen Investcorp Infrastructure Partners, as well as other institutional investors from North and Southeast Asia and the Middle East.

https://image.digitalinsightresearch.in/uploads/NewsArticle/18962987/main4448.jpg
Indrajit Sen

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