Meed | MGS spending lifts Saudi downstream sector

MGS spending lifts Saudi downstream sector

15 March 2024

The selection of contractors by Saudi Aramco for its third expansion phase of the Master Gas System network (MGS-3) has galvanised Saudi Arabia’s midstream and downstream sectors.

Aramco has divided engineering, procurement and construction (EPC) works on the estimated $10bn MGS-3 project into 17 packages. The first two packages involve upgrading existing gas compression systems and installing new gas compressors. The 15 other packages relate to laying gas transport pipelines across various locations in the kingdom.

Aramco issued letters of intent in February to contractors for 16 EPC packages of the MGS-3 project. Some of the successful contractors have also confirmed their selection by Aramco.

The original Master Gas System (MGS) was built in the 1970s and commissioned in 1982. Since then, Aramco has been supplying natural gas to its customers across Saudi Arabia via the network, mainly channelling associated gas from Ghawar and other oil fields.

Over the past decade, amid rising gas demand from Saudi Arabia’s industrial and household sectors, Aramco has undertaken projects to increase its non-associated gas production. It launched the second expansion phase of the MGS in 2015.

Looking ahead, contractors have expressed interest in participating in the main EPC tendering process for package 16 of the MGS-3 project, which is the only EPC package not to be tendered by Aramco out of the 17 packages. The scope of work on package 16 covers the laying of a gas transport pipeline network of more than 50 kilometres in and around Jeddah.

The completion of the EPC tendering exercise – from solicitations of interest to the selection of contractors – for a scheme of the scale of MGS-3 within a year’s time underscores the commitment of Aramco, and of the Saudi government, to ensuring the steady growth of the kingdom’s gas sector.

Moreover, as Amin Nasser, president and CEO of Aramco, has said: “The recent directive from the government to maintain our maximum sustainable capacity [of oil production] at 12 million barrels a day provides increased flexibility, as well as an opportunity to focus on increasing gas production and growing our liquids-to-chemicals business.”

Liquids-to-chemicals ambition

Saudi Arabia is striving to become one of the world’s largest petrochemicals producers by the end of this decade. Its global liquids-to-chemicals programme involves expanding its portfolio of petrochemicals assets both at home and abroad.

State enterprise Aramco, along with its petrochemicals-producing subsidiary Saudi Basic Industries Corporation (Sabic), have been tasked with establishing 10-11 large mixed-feed crackers by 2030. These petrochemicals crackers, which include greenfield developments and expansions of existing facilities, will be built both in Saudi Arabia and in overseas markets.

Aramco’s global liquids-to-chemicals programme aims to convert 4 million barrels a day (b/d) of its oil production into high-value petrochemicals and chemicals feedstocks by 2030.

With a total capital expenditure by Aramco and Sabic of up to $100bn, it is the Middle East and North Africa’s largest petrochemicals spending programme ever, and will generate a significant amount of work for consultants and contractors in the run-up to 2030.

Aramco has divided its liquids-to-chemicals programme in Saudi Arabia into four main projects. It took a major step forward in September by appointing project management consultants (PMC) for the different segments of the investment scheme.

Aramco has selected US firm KBR, France’s Technip Energies, UK-based Wood Group and Australia-headquartered Worley to provide PMC services for the four projects, which include:

Project East (PMC 1) – involves converting the Saudi Aramco Jubail Refinery Company (Sasref) complex in Jubail into an integrated refinery and petrochemicals complex by adding a mixed-feed cracker. The project also involves building an ethane cracker that will draw feedstock from the Sasref refinery.
Project West (PMC 2) – involves converting the Yanbu Aramco Sinopec Refining Company (Yasref) complex in Yanbu into an integrated refinery and petrochemicals complex through the addition of a mixed-feed cracker. Aramco and state-owned China Petroleum & Chemical Corporation (Sinopec) signed a memorandum of understanding in October for joint investment in the project, known as the Yanbu Refinery+ project.
Project X (PMC 3) – involves converting the Saudi Aramco Mobil Refinery Company (Samref) complex in Yanbu into an integrated refinery and petrochemicals complex by building a mixed-feed cracker.
Project RTC (PMC 4) – involves establishing a crude oil-to-chemicals (COTC) complex in Ras Al Khair in the Eastern Province. Sabic is a partner in the Ras Al Khair COTC project.

Saudi Aramco is expected to start a separate tendering exercise for the provision of front-end engineering and design (feed) services on the projects in the future. Feed contracts are scheduled to be awarded in 2024, while the main EPC contracts are due for award in 2025.

Desulphurisation investments

As more sulphur recovery projects come online in Saudi Arabia, several Aramco gas treatment and processing plants in the Eastern Province and around the kingdom will discharge increased volumes of sulphur.

Existing and planned sulphur-handling facilities in the Eastern Province may not be able to cope with the incremental volumes of sulphur generated by Aramco assets in the future.

The company has therefore planned to develop a grassroots sulphur-handling complex at Ras Al Khair port to meet this requirement. The planned complex will facilitate the receiving, formation, storage and export of molten sulphur.

To be built on a public-private partnership (PPP) basis, the proposed facility is set to come online by 2029. Aramco has gauged the interest of third-party investors in developing the project.

The Ras Al Khair project is understood to be the second such PPP scheme launched by Aramco in the desulphurisation domain. Aramco is undertaking desulphurisation initiatives in line with its environmental commitments and emissions-reduction targets.

Aramco is understood to be close to awarding the build-own-operate-transfer contract for a major project that involves modifying and upgrading sulphur recovery units at seven of its gas processing plants in the Eastern Province, by building tail gas treatment units.

Two consortiums are competing for the multibillion-dollar PPP scheme, with Aramco expected to award the main contract later this year.

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Indrajit Sen

Exclusive from Meed

Consortiums submit bids for Sadara cogeneration plant
11 September 2026
UAE plans 150km Boring Company tunnel network
11 September 2026
Heisco wins $359m oil contract in Kuwait
11 September 2026
Abu Dhabi eyes digital requirements for utility projects
11 September 2026
Saudi Arabia tenders next phase of King Saud Air Base
10 September 2026

Consortiums submit bids for Sadara cogeneration plant
11 September 2026
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At least three consortiums have submitted bids for the contract to develop and operate a cogeneration steam and power plant catering to the Sadara petrochemicals complex in Saudi Arabia.

The planned independent steam and power plant (ISPP) project will have a capacity for 400MW-450MW of combined-cycle electricity generation and 550-700 tonnes an hour of steam.

According to sources, bids were submitted for the contract at the end of August.

The consortium bidders include:
- Abu Dhabi National Energy Company (Taqa) / Samsung C&T (South Korea)
- Al-Jomaih Energy & Water (Saudi Arabia) / Albawani (Saudi Arabia) / Sepco 3 (China)
- Acwa (Saudi Arabia), Korea Electric Power Corporation (Kepco) / Doosan Enerbility (South Korea)
Sadara Chemical Company (Sadara) is the project client. It is the downstream joint venture of Saudi Aramco and US-headquartered Dow Chemical.

The estimated $500m project includes construction of a power plant, substations, a seawater intake system and associated switchyards and switchgear.

The project will also include gas turbines and a back-pressure steam turbine, as well as facilities for steam production.

In 2024, MEED exclusively reported that Sadara had prequalified potential bidders for the project. It is understood that the request for proposals was issued towards the end of last year.

The first units at the $20bn Sadara petrochemicals complex in Jubail began production in 2016, and the complex became operational in 2017.

The Sadara complex is designed to produce more than 3 million tonnes a year (t/y) of chemicals and performance plastics, including polyurethanes, propylene oxide, propylene glycol, elastomers, polyethylene, glycol ethers and amines.

Construction is also continuing on the Najim cogeneration facility, which will supply the Amiral petrochemicals complex with up to 475MW of power and approximately 452 tonnes an hour of steam.

Previously known as the Amiral cogeneration independent steam and power plant, the project is being developed by a team comprising Abu Dhabi National Energy Company (Taqa) and Japanese power generation company Jera.

South Korean contractor Samsung C&T is the engineering, procurement and construction contractor for the project.
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Mark Dowdall
UAE plans 150km Boring Company tunnel network
11 September 2026

The UAE plans to build more than 150 kilometres of underground tunnel with US tunnelling firm The Boring Company, in a programme backed by a $3bn funding round the UAE led.

The Series D round values the Boring Company at $23bn, about four times the $5.7bn it was worth after a 2022 funding round. The UAE and affiliated investment entities led the round, which will accelerate a partnership to deploy underground infrastructure across the UAE, the firm said.

The 150km target marks a substantial expansion of the company’s footprint in the country, extending work already committed through the Dubai Loop project. It contrasts sharply with what has been contracted so far. The Boring Company has signed a construction contract with Dubai’s Roads & Transport Authority (RTA) for the pilot phase of Dubai Loop, covering a 6.4km route and four stations linking Dubai International Financial Centre (DIFC) and Dubai Mall. The pilot is expected to cost about AED565m ($154m), with tunnelling due to begin in the second half of this year.

The 150km figure therefore represents an ambition for the wider partnership rather than a contracted volume, with the bulk of the network yet to be tendered, designed or awarded. No timeframe has been attached to the target.

A second Dubai Loop phase will connect Dubai World Trade Centre and DIFC with Business Bay, extending the tunnels to 22km across 19 stations. The total cost across both phases is expected to be about AED2bn ($545m), with completion scheduled within three years. The pilot route is projected to carry about 13,000 passengers a day, rising to about 30,000 a day across the full route.

Other investors in the round include Human Capital, Vy Capital, Valor Equity Partners, Sequoia Capital, Andreessen Horowitz, Temasek, Shamal Holding and Baron Capital. The proceeds will also fund hiring, the scaling of the company’s Loop transit systems in the US cities of Las Vegas and Nashville, and further development of its Prufrock tunnel-boring machines, which it says can operate in both soft ground and hard rock.

The RTA and the Boring Company signed a memorandum of understanding in February last year to explore developing the Dubai Loop, and the construction contract followed in February this year. In May, US engineering firm Parsons was appointed as programme manager for the pilot phase, with a scope covering independent design verification, permitting and multidisciplinary design reviews.

The appointment comes amid a broader shift towards underground construction across the Gulf, as metro, sewerage and highway works in the UAE, Saudi Arabia and Qatar increasingly default to tunnelling.

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Yasir Iqbal
Heisco wins $359m oil contract in Kuwait
11 September 2026
Kuwait-based Heavy Engineering Industries & Shipbuilding Company (Heisco) has been awarded a contract worth KD111.05m ($359m) to develop storage tanks for Kuwait’s Jurassic Light Oil (JLO) export facilities, according to a stock market filing.

The scope of the contract includes civil, mechanical, electrical and instrumentation works, as well as engineering, procurement and construction (EPC) services for the tanks.

The contract was awarded by India’s Larsen & Toubro (L&T), the main contractor for a broader project to develop JLO storage and export facilities in Kuwait, as well as upgrade Kuwait Oil Company’s (KOC’s) existing export network.

The $979.2m main contract for this broader project was awarded to L&T on 15 July.

The contract for Heisco’s scope of work has a time period of 42 months, according to its stock market filing.

Oil crisis

Kuwait’s oil and gas sector is currently in crisis due to the regional war that started after the US and Israel attacked Iran on 28 February.

The war has severely disrupted exports through the Strait of Hormuz, which Kuwait relies on in order to ship crude exports.

It has also disrupted imports of equipment and materials for projects, raising project costs.

Sheikh Nawaf Saud Al-Sabah, deputy chairman and CEO of Kuwait Petroleum Corporation (KPC), the country’s national oil company, has described the current conflict as the biggest oil crisis the country has faced since Iraq’s 1990 invasion.

Despite the significant reduction in crude exports, Kuwait’s state-owned oil companies have continued to tender some projects.

Export facilities

The scope of work under the contract awarded to L&T in July includes the EPC of six new crude oil storage tanks, each with an operating capacity of 618,000 barrels, along with associated facilities, the Mumbai-headquartered company said on 29 July.

The project also involves “the installation of new pipelines and comprehensive upgrades to Kuwait’s existing crude loading and export network, to seamlessly accommodate increased production and enhance the country’s crude handling capabilities”, the Bombay Stock Exchange-listed company said.

L&T also said that the contract will be executed on a lump-sum turnkey basis.

Only two companies submitted bids for the contract in October last year:
- L&T (India): KD303.5m ($988m)
- Petrofac (UK): KD310.6m ($1.01bn)
Following bid submission, KPC discussed the potential cancellation of the tender due to bids coming in significantly over budget and Petrofac becoming ineligible to win contracts in Kuwait.

The contractor was temporarily barred from participating in tenders in Kuwait’s oil and gas sector in December last year.

Petrofac received the ban after the company announced it had applied to appoint administrators, a move that potentially put thousands of jobs at risk and increased uncertainty for projects worth billions of dollars in the Middle East and North Africa region.

Despite discussions about cancelling the tender, KPC ultimately decided to proceed with the award process because it considered the project a high priority.

One source previously told MEED: “Around the same time, projects worth around $8bn were cancelled because of bids coming in over budget, but this one has gone ahead because KPC sees it as an essential project.”

The project was originally tendered in November 2024, with a bid deadline of 1 December the same year. The bid deadline was extended several times before bids were ultimately submitted.
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Wil Crisp
Abu Dhabi eyes digital requirements for utility projects
11 September 2026

Abu Dhabi is set to place greater emphasis on digital and data capabilities in the procurement of future energy and water projects as the emirate prepares for the next expansion phase of its infrastructure network.

Speaking to MEED, Ahmed Mohammed Al-Rumaithi, undersecretary of the Department of Energy, said: “Future utility projects in Abu Dhabi are expected to increasingly include clear digital and data requirements as a core part of the procurement process, alongside the delivery of physical infrastructure.”

The move comes as Abu Dhabi plans to invest more than AED300bn ($81.7bn) in energy and water infrastructure over the next decade under the Department of Energy’s Strategic Framework for the Energy and Water Sector through to 2050.

“Projects will be expected not only to construct assets, but also to demonstrate how operational data is generated, cleansed, governed and exchanged across the full asset lifecycle,” Al-Rumaithi said.

Procurement frameworks are also expected to “prioritise digital readiness, interoperability, cybersecurity and adherence to common data standards” so that new assets can operate as part of an integrated and connected energy and water ecosystem.

AD.WE roadmap

The approach builds on the Department of Energy’s experience with AD.WE, an artificial intelligence (AI)-powered platform that brings together live and historical data from across Abu Dhabi’s energy and water systems.

The department unveiled AD.WE’s development roadmap in October last year, including the full rollout and expansion of the platform beyond electricity and water to district cooling and petroleum products.

The roadmap initially targeted the rollout of phase three of the platform’s development by the fourth quarter of this year, identifying applications including farm irrigation optimisation, intelligent leak detection, consumption intelligence and network planning.

Al-Rumaithi said AD.WE provides a shared operational view of the system and supports operational and regulatory decision-making through agentic AI-driven optimisation and planning.

The platform enables 20% to 30% efficiency gains across capital expenditure (Capex) and operating expenditure (Opex) in targeted parts of the network, according to Al-Rumaithi.

AI planning

AI is also being used to improve long-term infrastructure planning as electricity demand grows, including demand associated with digital infrastructure.

Abu Dhabi’s power demand is expected to double by 2050, with total installed capacity projected to rise from about 25GW to 50GW, according to the Department of Energy.

“AI is reshaping infrastructure planning in two ways. It is driving new electricity demand through digital infrastructure, while also providing more sophisticated tools to understand how demand for energy and water will evolve over time,” Al-Rumaithi said.

AI enables more accurate forecasting, scenario modelling and network analysis, allowing planners to assess future requirements across electricity generation, transmission, water production, cooling and supporting infrastructure.

The strategic framework is supported by an investment of approximately AED35bn a year in “sector development and operations”, Al-Rumaithi said.

He said the increasing use of digital systems will require greater focus on data governance, cybersecurity, transparency and accountability to ensure innovation strengthens the resilience and reliability of essential services.

For utilities, developers and technology providers, Al-Rumaithi said preparation should focus on “high-quality data, robust governance, cybersecurity and workforce capabilities needed to manage increasingly connected infrastructure”.

“Equally important,” he said, “is designing systems that can exchange information securely and operate within a wider digital ecosystem. This enables better coordination between utilities, technology providers and regulators, improving both operational performance and long-term planning.”

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Mark Dowdall

Saudi Arabia tenders next phase of King Saud Air Base

10 September 2026

Saudi Arabia’s Ministry of Defence & Aviation has started the tendering process for the next phase of the King Saud Air Base in the kingdom.

Contractors have been given until 20 October to submit their bids.

The scope of works covers the construction of the headquarters building, administrative buildings, operations and maintenance area, police camp facilities, weapons and ammunition area, residential facilities, airfield facilities and other associated facilities.

The project duration is three years.

The air base spans an area of 383 square kilometres (sq km) in the Hafr Al-Batin area of the kingdom’s Eastern Region.

Contracts worth about SR6.6bn ($1.8bn) for the project’s first phase were awarded early last year.

The joint venture of local firms Isam Khairi Kabbani Group and Alfanar Projects was appointed as the main contractor for the first package, which was worth about SR2.9bn ($783m).

The consortium comprising Riyadh-based Albawani, Shibh Al-Jazira Contracting and Kuwait’s Alghanim International won the second package, worth about $1bn.

According to GlobalData, Saudi Arabia’s defence budget is projected to grow from $68bn in 2027 to $86.3bn by 2031, representing a compound annual growth rate (CAGR) of 6.1%.

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