meed-logo

line1 line2 line3
SIGN IN / REGISTER

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.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11595902/main49193808.jpg
Indrajit Sen

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

Click here to register
Exclusive from Meed
Related Articles
  • Chinese contractor wins Morocco solar plant deal

    10 August 2026

    China Harbour Engineering Company (CHEC), a subsidiary of China Communications Construction Company (CCCC), has won a contract to build a solar photovoltaic (PV) power plant in Fez in northern Morocco.

    Known as GreenPower Morocco 4 (GPM4), the project is being developed by Moroccan company GPM Holding through its utility-scale solar subsidiary GPM Parks.

    The project covers engineering design, equipment procurement and installation, construction of an operation and maintenance building, grid connection and commissioning. It also includes upgrades to the associated substation.

    According to CHEC, the completed plant will supply electricity to the local grid, although it did not disclose the project’s capacity or contract value. 

    The project is being developed under Law 13-09, which provides Morocco’s framework for private renewable energy generation.

    According to its website, GPM Holding is also developing another solar PV project called GreenPower Morocco 2 (GPM2). This follows the completion of its first solar project, the 34MW project (GPM1) commissioned in Tangier in 2024. 

    GPM1 was developed by Green Power Morocco, a special purpose vehicle owned by GPM Holding and UAE-based Amea Power. The $30m project covers 75 hectares and includes 91,000 PV panels. It is expected to generate about 66,149MWh a year.

    The project has a 25-year power purchase agreement in place with Amendis, a subsidiary of Veolia Morocco. PowerChina was the main engineering, procurement and construction (EPC) contractor.

    Chinese contractors have previously been involved in other projects in Morocco’s renewable energy sector.

    Shandong Electric Power Construction Company (Sepco 3), a subsidiary of PowerChina, was part of the EPC consortium for the 200MW Noor 2 concentrated solar plants and 150MW Noor 3 concentrated solar power projects at the Noor Ouarzazate complex.

    New contract awards have been limited in Morocco in 2026, although six solar PV plants are now in the execution stage under phases one and two of the 305MW Noor Atlas solar PV programme.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18263680/main.jpg
    Mark Dowdall
  • Aramco puts out fire at Jizan refinery after Houthi strike

    10 August 2026

    Saudi Aramco said it had extinguished a fire that broke out at its Jizan refinery on Saudi Arabia’s Red Sea coast after the facility was hit in drone strikes by Yemen-based Houthi rebels on 9 August.

    The kingdom’s Ministry of Energy said the fire occurred at an Aramco refinery facility in Jizan and that emergency authorities had completed the necessary procedures to deal with the incident.

    The energy ministry did not say what started the fire, saying only that the incident caused no injuries.

    The Houthi rebels later claimed responsibility for the attack.

    The province of Jizan lies close to Saudi Arabia’s border with Yemen and has repeatedly been targeted by the Houthis in attacks on the kingdom’s energy infrastructure.

    The strike on the Jizan refinery was the second attack on the facility by the Houthis in as many weeks. Aramco shut the refinery on 27 July following a similar drone strike, which, according to media reports, damaged the integrated gasification combined-cycle unit and tank farm at the complex.

    On a call with investors to discuss Aramco’s second-quarter results, CEO Amin Nasser said recent attacks on the company’s facilities in the world’s top oil-exporting country had caused some disruption to production, but that he was confident operations could be restored quickly. He said the attacks had had no material operational or financial impact.

    Jizan refinery complex

    Saudi Aramco’s sprawling Jizan refinery complex entered operations in 2021.

    Aramco undertook the estimated $16bn-plus project in late 2010. The scheme consists of a refinery with an output capacity of 400,000 barrels a day (b/d), a major marine terminal and a 4GW combined-cycle power plant in Baish, in Saudi Arabia’s southwestern Jizan region.

    The Jizan refinery covers an area of 12 square kilometres. The complex processes Arabian Heavy and Arabian Medium crude grades to produce 80 million b/d of gasoline, 250 million b/d of diesel and more than 1 million tonnes a year of petrochemical products such as benzene and paraxylene.

    A multiple-pier marine terminal supports the supply of crude oil from oil fields located mainly in the kingdom’s Eastern Province to the refinery, as well as the export of surplus refined products to overseas markets. The terminal has been designed to accommodate very large crude carriers.

    A 4,000MW combined-cycle power plant uses approximately 90,000 b/d of vacuum residue from the refinery to generate electricity, hydrogen and water for the refinery, while conveying excess power to the national grid.

    The hydrocracker unit comprises two parallel trains with a combined capacity of 54,500 b/d. The diesel hydrotreater plant comprises two trains, each with a capacity of 87,500 b/d.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18262347/main.jpg
    Indrajit Sen
  • Shamal picks Dutco for Dubai Zoo site homes

    10 August 2026

    Dubai-based Shamal Holding has awarded local contractor Dutco Construction the main construction works contract for a low-rise residential project on the site of the former Dubai Zoo in Jumeirah 1.

    The project will comprise 90 low-rise homes and is designed as a residential leasing community that will remain under Shamal’s ownership, with all homes offered for premium leasing.

    The development will retain mature trees from the former zoo and is planned around shared courtyards, landscaped open spaces and a central park. Residents will have access to a clubhouse, wellness area, children’s play area, family pool, lounge and gym.

    The architect is DXB Lab. The local H&H is the development manager for the project.

    Dutco has previously worked with Shamal on infrastructure elements of the Dubai Harbour and Dubai Harbour Marinas developments.

    Shamal’s wider real estate portfolio includes the Naia Island, Dubai Harbour and Nad Al-Sheba Gardens developments. The company also holds hospitality and leisure assets, including partnerships with Jumeirah, Hilton and Baccarat, and operates attractions such as Skydive Dubai and Deep Dive Dubai.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18262386/main.png
    Colin Foreman
  • WEBINAR: Mena Oil & Gas Projects Market 2026-27

    10 August 2026

    Webinar: Mena Oil & Gas Projects Market 2026-27 
    Thursday 27 August 2026 | 11:00 AM GST  |  Register now

    Agenda:

    • Summary of the Mena oil, gas and petrochemicals projects market 
    • Overview of major megaprojects, including project programmes
    • Analysis of active contracts and spending to date
    • Review of top contracts by work already awarded
    • Long-term capital expenditure outlays and forecasts
    • Key contracts expected to be tendered and awarded over the next 18 months
    • Leading clients, contractors and market participants
    • Spending by segment: oil, gas and petrochemicals (upstream, downstream, onshore and offshore) 
    • Audience Q&A 

    Hosted by: Indrajit Sen, MEED’s oil & gas editor

    Click here to register

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18260597/main.gif
    Indrajit Sen
  • Spanish firm renews Yanbu desalination O&M contract

    10 August 2026

    Spain’s Aqualia has announced it has renewed a contract to operate and maintain three floating desalination plants in Yanbu on Saudi Arabia’s Red Sea coast.

    The contract was awarded by the National Shipping Company of Saudi Arabia (Bahri) and will run until 14 September 2028, with an option to extend for a further two years.

    The three reverse osmosis (RO) plants are mounted on barges and have a combined production capacity of 150,000 cubic metres a day (cm/d). Each plant has a capacity of 50,000 cm/d.

    The three plants were originally deployed at Al-Shuqaiq and are designed to be relocated along Saudi Arabia’s coastline according to water demand. The barges are currently located at Yanbu.

    The $255m floating desalination project was commissioned for the Saudi Water Authority in 2022, with Bahri as the developer and UAE-based Metitio as the main contractor.

    Bahri is publicly listed on the Saudi Exchange but has significant government ownership, with the Public Investment Fund (PIF) holding 22.5% and Saudi Aramco Development Company owning 20% of the company.

    Aqualia is providing operation and maintenance services in Saudi Arabia through its joint venture Haji Abdullah Alireza Integrated Services Company (Haaisco), in which it holds a 51% stake.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18259350/main.jpg
    Mark Dowdall