meed-logo

line1 line2 line3
SIGN IN / REGISTER

Lummus targets large contracts in Saudi Arabia

26 September 2023

 

Register for MEED's guest programme 

US-headquartered petrochemicals specialist Lummus Technology is expecting to grow rapidly in Saudi Arabia over the next decade, according to the company’s chief technology officer Ujjal Mukherjee.

Mukherjee is in the process of moving his entire team from the US to Saudi Arabia in order to capitalise on opportunities in the Middle East.

“The Middle East and North Africa are a key focus for us because of the scale of the planned capital expenditure in our industry,” he says.

“Within the region, Saudi Arabia is the most important to us because of the investments in petrochemicals that are planned.

“Qatar is also important because of its plans for natural gas and petrochemicals, but in terms of investment, Saudi Arabia is not just leading the region, but the entire world.”

Lummus is anticipating as many as 10 or 11 ethane crackers to be installed in Saudi Arabia over the next seven to eight years

Project expectations

Lummus says that Saudi Arabia’s plans to develop facilities with the capacity to convert 4 million barrels of crude oil to chemicals represent $100bn-$200bn in investment.

As part of the push to boost crude-to-chemicals production, Mukherjee is expecting at least four or five greenfield complexes to be developed in Saudi Arabia.

On top of this, he says there are several opportunities to upgrade existing facilities in the country, both in the eastern Jubail area and in the west coast’s Yanbu region.

Across all of these greenfield and upgrade projects, Lummus is anticipating as many as 10 or 11 ethane crackers to be installed over the next seven to eight years.

“This is a huge investment – and that is why everyone in the world of petrochemicals is focused on Saudi Arabia,” says Mukherjee.

“Elsewhere, China is slowing slightly and the Russian market is off limits. There are opportunities in Southeast Asia and India specifically, but the GCC nations are the most important.”

In addition to the GCC states, Lummus has significant interest in markets across the Middle East and North Africa (Mena) region, including Egypt and Turkiye.

Turkiye is of particular interest because of its stated aim of becoming self-sufficient in terms of petrochemicals production, according to Fadi Mhaini, Lummus Technology’s managing director for Mena.

Turkiye is also in a financial position that means investments in world-scale petrochemicals plants are feasible.

The investment climate in Egypt is more challenging, but it remains of interest because of its significant reserves of oil and gas, large population and internal demand for petrochemicals products.

“There are 100 million people living in Egypt and there is a great demand for polymers and plastics,” says Mhaini.

Per capita consumption of plastics in Egypt is estimated to be 21.8 kilograms (kg) a year. This is compared to more than 130kg in the US.

Lummus sees this as a potential sign of pent-up demand for plastics and says new facilities that come online in Egypt could see significant success by supplying the local market.

Saudi challenges

While there are big opportunities in Saudi Arabia’s petrochemicals sector, Mukherjee says it remains a market with significant challenges.

“The biggest challenge we have is getting subject matter expertise in the complex technologies that we license, especially with the focus on employing local skilled labour,” he says.

“We have a lot of graduates coming from good universities there, but you need a certain degree of experience in absorbing these complex technologies.”

A key area of focus for Lummus is growing the number of experienced specialists that it employs and accelerating the transfer of knowledge from its experienced workers to the local talent pool in Saudi Arabia, as well as in other markets, including the UAE.

In order to achieve this goal, the company plans to create centres of excellence across the Mena region.

It has already created one in Bahrain, and says that it has proven effective at providing education for local operators in complex technologies and advanced computing tools.

By recruiting locally and relocating experienced staff from around the world, Lummus expects to grow its Saudi Arabia office from an initial size of about 50 employees to more than 200 in the next three to four years, according to Mukherjee.

While the cornerstone of business activities for Lummus is technology licensing, it plans to use its Saudi office to work with local companies to provide a wide range of services, including the provision of engineering work and of spare parts and equipment.

Project acceleration

Since Lummus was spun off by McDermott in a $2.7bn deal in 2020, one of the key strategic changes is a renewed focus on project streamlining and reduced project completion times.

Mukherjee says this has positioned the firm well to win contracts in Saudi Arabia, where the country’s leadership is keen to execute large-scale projects on an accelerated schedule.

“As soon as we learned that we were going to be an independent company, we decided to take advantage of all of the engineering tools that are part of our ecosystem and use them to accelerate the engineering, procurement and construction (EPC) processes,” he says.

“We have used very advanced engineering tools to dramatically reduce the time it takes us to do early engineering and front-end engineering and design work.

“This means that we have to work with very highly skilled engineering contractors and get them started very early on in the procurement cycle.”

As part of Lummus Technology’s new focus on executing projects on an accelerated schedule, it has started to work more closely with several EPC contractors.

“Closer working relationships with these companies are a key way of creating a win-win situation for everyone involved,” he says.

Lummus estimates that the upcoming greenfield oil-to-chemicals projects in Saudi Arabia are each expected to be worth $20bn-$35bn.

“The size of these projects means that there is no EPC contractor in the world that can take them on alone,” says Mukherjee.

Fear of risk

One of the key challenges in Saudi Arabia’s petrochemicals projects sector is that several large international contractors are less keen to take on contracts that use the EPC model due to the potential risks.

Many companies are worried that unpredictable price inflation could mean the EPC contract model would leave them out of pocket if the cost of materials and equipment suddenly increases.

“Even working in consortium, there are very few companies globally that are well equipped to execute complex projects on this scale on an accelerated time schedule,” says Mukherjee. “The technology is there, but there is a risk averseness among many large EPC companies that have been burnt in the past.”

While the projects are difficult and will require close cooperation between different contractors, Mukherjee is confident that his company will play a key role in many of the planned petrochemicals facilities in Saudi Arabia.

He says it is likely that his company will win contracts on many of Saudi Arabia’s upcoming petrochemicals projects, and that the firm is expanding the office so that it can cooperate closely with clients and subcontractors in the country to provide quicker response times to any queries.

“By moving there, we want to make sure that [clients and subcontractors in] Saudi Arabia, Kuwait and the UAE know that they will not have to cross time zones to get immediate responses,” Mukherjee says.


Ujjal Mukherjee, Fadi Mhaini and the Mena team

Market outlook

Lummus is optimistic about how Saudi Arabia’s investment in petrochemicals production will benefit the country’s economy in the long term.

Mukherjee says Saudi Arabia could become an increasingly powerful force in global petrochemicals markets in the coming years if it manages to successfully execute the planned projects to an accelerated schedule.

“What Saudi Arabia has is one of the cheapest raw materials for petrochemicals production. The same is true for Qatar and Abu Dhabi,” he says.

“Very cheap oil and gas gives Saudi Arabia a huge advantage and competitive edge over places like South Korea.”

Mukherjee says that, in the past, South Korea maintained a competitive edge in terms of managing project schedules and costs.

He adds that a petrochemicals project that could be completed in 36-42 months in South Korea would previously have taken 60-72 months in Saudi Arabia.

Now, the difference is being reduced by Saudi Arabia’s plans to execute projects using an accelerated schedule.

“If Saudi Arabia can do it, it will put itself in a position where it will be a dominant force when it comes to manufacturing certain polymers,” he says.

Aligning the scheduled start-up of Saudi Arabia’s new wave of planned petrochemicals projects with trends in the global market is likely to be key to the kingdom's success, according to Mukherjee.

In the past year and half, the prices of key petrochemicals products have been subdued as large projects have come online in China and other locations.

This temporarily created an oversupply in certain chemicals despite global per-capita consumption having increased, Mukherjee says.

He believes global prices will stabilise after 2030 and that demand will outstrip that for both gasoline and diesel.

By the end of this decade, Mukherjee expects that demand for polyethylene in particular will start to grow robustly, as is demand for polypropylene – and that Saudi Arabia will be well positioned to take advantage of this growth.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11170351/main.jpg
Wil Crisp

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

Click here to register
Exclusive from Meed
Related Articles
  • Arada completes Sokoon buildings construction

    26 March 2026

    Sharjah-based private real estate developer Arada has announced the completion of five additional buildings in the Naseej District of its Aljada development.

    Kuwaiti firm Mohammad Abdulmohsen Al-Kharafi & Sons secured the construction contract for the Sokoon buildings in 2023, replacing Airolink Building Contracting as the project’s main contractor.

    The first four Sokoon buildings were completed in December 2023.

    In April last year, Arada also announced the completion of all eight Tiraz buildings in the Naseej District. The Tiraz buildings comprise 920 homes, including studios, one-bedroom and two-bedroom apartments.

    With the completion of the five Sokoon buildings, Aljada’s total number of completed residential units has risen to more than 8,200.

    Spanning 2.2 square kilometres, Aljada features residential districts, retail spaces, educational institutions, healthcare services and other facilities.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16141382/main.png
    Yasir Iqbal
  • Local contractor wins Medina substation contract

    26 March 2026

    Danway Saudi Arabia has won a contract with National Grid SA to construct a new 110/13.8kV substation in Medina.

    The contract is valued at more than SR100m ($26.7m) and covers the construction of the King Abdulaziz Road substation, including design, engineering, supply, installation, testing and commissioning.

    The project is expected to take approximately 23 months to complete.

    Key components include 110kV gas-insulated switchgear (GIS), 50/67MVA 110/13.8kV power transformers and 13.8kV switchgear.

    National Grid SA is a wholly owned subsidiary of Saudi Energy, formerly Saudi Electricity Company. It owns and operates the kingdom’s high-voltage transmission network and is responsible for grid planning, interconnection and system reliability.

    The operator recently appointed another local firm, Nesma Infrastructure & Technology, as the contractor for the construction of two 380kV double-circuit overhead transmission lines in Riyadh, connecting an existing substation to a wind power substation, referred to as Samha Wind BSP.

    As MEED understands, National Grid SA is also due to begin construction on the replacement of 132kV oil-filled underground cable circuits between several substations in the Central Operation Area in Murabba in Riyadh.

    Riyadh-based Keir International is the engineering, procurement and construction contractor for the project.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16139578/main.jpg
    Mark Dowdall
  • Neom terminates $5bn Trojena dams contract with WeBuild

    26 March 2026

    Register for MEED’s 14-day trial access 

    Neom has terminated its contract with Italian contractor Webuild for the construction of three dams feeding a freshwater lake, as well as ‘The Bow’ architectural structure at Trojena in northwest Saudi Arabia.

    In a statement posted on its website, Webuild said: “The termination will become effective on 29 March. As of that date, the works are approximately 30% complete, with a remaining project backlog for Webuild of approximately €2.8bn ($3.2bn).”

    Neom awarded Webuild a SR20bn ($5bn) contract to build the dams in late 2023, which MEED exclusively reported at the time.

    The termination is the latest in a series of high-profile contract cancellations by Neom in recent weeks. Earlier this week, Neom terminated its contract with Malaysian contractor Eversendai Corporation for the steel structural works on the Ski Village project in Trojena.

    In a statement published on its website, Eversendai said it had received an official notice that the termination would take effect from 26 March.

    In January this year, Saudi Arabia confirmed the postponement of the 2029 Asian Winter Games, which were scheduled to be held at Trojena. Trojena was chosen to host the event in October 2022.

    Neom has also cancelled contracts for the construction of the tunnel sections of The Line in northwest Saudi Arabia.

    In a stock exchange filing dated 13 March, South Korean contractor Hyundai E&C said Neom cancelled its contract on 29 December last year.

    Hyundai E&C was executing the drill-and-blast section of The Line’s tunnels in a joint venture with Greece’s Archirodon and South Korean counterpart Samsung C&T.

    These developments follow a wider strategic review of Neom last year, as Saudi Arabia reassesses priorities under its Vision 2030 programme.

    With tighter liquidity at the sovereign wealth fund level, resources are being redirected towards projects linked to the Fifa World Cup 2034, Expo 2030, and essential housing, healthcare and education initiatives.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16140200/main.jpg
    Yasir Iqbal
  • Iraq gas field project disrupted by regional conflict

    26 March 2026

     

    Register for MEED’s 14-day trial access 

    Progress on Iraq’s project to develop the strategically important Akkas gas field has been disrupted by security issues related to the US and Israel’s ongoing war with Iran, according to industry sources.

    Work activity at the project site has been significantly reduced due to security concerns, and the project is now expected to take longer to complete.

    Iraq held a ceremony in January this year to mark the restart of drilling operations at the site as part of the field development project.

    In July last year, Iraq’s Oil Ministry announced signing a contract with the US-based oil field services provider SLB to develop production at Iraq’s Akkas gas field.

    Under the terms of the deal, SLB will drill wells at the Akkas field, aiming to initially raise production to 100 million cubic feet a day (cf/d).

    Many of SLB’s non-Iraqi employees have now been evacuated from the country.

    Over the long term, Iraq is targeting gas production of 400 million cf/d from the field.

    The contract with SLB replaces a previous deal with Ukraine-based Ukrzemresurs, which has been terminated.

    It also covers the construction of surface infrastructure and pipelines to connect Akkas to central processing units.

    The gas produced at Akkas will be used to fuel the Anbar combined-cycle power plant, which is under construction by the Electricity Ministry.

    Akkas gas field development

    The Akkas gas field, located in Anbar province in western Iraq, has 5.6 trillion cubic feet of proven reserves. The field was discovered in 1992 and began production in 1993.

    Since then, Iraq’s plans to develop the Akkas gas field to its full potential have experienced several setbacks.

    In April last year, the Iraqi Oil Ministry signed an agreement with Ukrzemresurs to develop the field.

    At the time, the Oil Ministry said that the partners were aiming to produce 100 million cf/d in the first two years, as per the agreement, with output targeted to increase to 400 million cf/d within four years.

    Prior to Ukrzemresurs, South Korean company Kogas was responsible for developing the field.

    Rights to the field were originally awarded to a consortium of Kogas and Kazakhstan’s state-owned oil company KazMunaiGas (KMG) in the third licensing round, which was launched in October 2011.

    KMG pulled out, leaving Kogas as the sole investor and operator on new contract terms.

    When the deal with Ukrzemresurs was originally announced last year, it was negatively received by some Iraqi politicians, with the Oil and Gas Committee in Iraq’s parliament rejecting the contract signing.

    At the time, Ali Al-Mashkour, a member of the Oil and Gas Committee, told Iraq’s Shafaq News Agency: “This contract involves a great waste of Iraq’s wealth, and there will be a waste of Iraq’s oil, and this confirms that Iraq is once again failing to choose reputable companies to work with in the most important economic field in the country.”

    He added: “We will work to uncover and expose the suspicions in this contract during the next stage, especially since this contract was made by some representatives for specific interests, which we will reveal soon with evidence.”

    Plans to sign the contract to develop the Akkas gas field with a Ukrainian company were first announced by the Oil Ministry in September 2023, but Ukrzemresurs was not named at the time.

    Iraq’s government is trying to transform the country into a gas-exporting nation. Currently, Iraq is reliant on Iran for gas imports.

    Both Saudi Arabia and the US, which are looking to contain Iranian influence in the region, have been supporting Iraq in developing its non-associated gas fields as this will reduce Iraq’s economic reliance on Iran.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16138892/main.png
    Wil Crisp
  • Dubai seeks contractors for Nadd Hessa stormwater project

    26 March 2026

    Dubai Municipality has invited contractors to prequalify for a contract to build a sewerage and stormwater system in the Nadd Hessa area.

    The project is being procured through the Sewerage and Recycled Water Projects Department.

    The submission deadline is 2 April.

    Nadd Hessa is an emerging development area, located between Dubai Silicon Oasis and Academic City along the E311 corridor.

    It has been earmarked for future residential expansion, with enabling infrastructure now being tendered to support planned housing and community developments in the area.

    The scheme, known as DS 328/1–C1, covers the construction of sewerage and stormwater infrastructure, including approximately 12.4 kilometres of sewerage lines with diameters of up to 400 millimetres.

    The scope also includes about 14km of stormwater lines with diameters of up to 1,000 millimetres.

    In addition, the project involves around 500 metres of microtunnelling works for both sewerage and stormwater networks.

    The municipality is currently prequalifying contractors for several upcoming water projects, including the expansion of the Jebel Ali sewage treatment plant (STP) phases one and two.

    The upgraded facility will be capable of treating an additional sewage flow of 100,000 cubic metres a day (cm/d).

    Bid submissions for this project are also due by 2 April.

    In addition, the authority is planning a broader review of Dubai’s water and wastewater infrastructure to support future population growth, including identifying locations for future infrastructure. 

    Two separate consultancy tenders were issued in March.

    One involves a study to develop a sustainable urban drainage systems strategy across the emirate. The other covers a review of the emirate’s sewage treatment and recycled water distribution strategy. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16138660/main.jpg
    Mark Dowdall