Image Credits : Upstreamonline
3 minutes read

Saudi Aramco poised to award multibillion-dollar deals for world’s largest offshore oilfield

Saudi Aramco is close to finalising its preferred contractors for two large engineering, procurement and construction deals for the onshore infrastructure to handle the expansion of the Safaniyah oilfield.

The new expansion phase at Safaniyah, the world’s largest offshore oilfield, is crucial to Aramco’s ambition to increase its oil production capacity to 13 million barrels per day by 2027, up from the current 12 million bpd.

Multiple offshore and onshore tenders for the project are in the bidding stage, with Aramco expected to finalise the awards within weeks for two onshore EPC packages touted to be together worth between $4 billion and $5 billion, two people with direct knowledge of the development told Upstream.

Indian engineering giant Larsen & Toubro (L&T) is said to be “well positioned” for the first Safaniyah contract comprising a huge gas oil separation plant (GOSP) facility, one person noted.

“L&T is the potential front-runner for Safaniyah GOSP, but the award is not yet placed by the operator,” he added.

South Korea’s Hyundai Engineering & Construction is understood to be the preferred contractor for a second EPC package involving offsite and utilities, another source stated.

The two contracts are a crucial part of Aramco’s Safaniyah incremental expansion programme.

Aramco declined to comment and L&T did not respond to Upstream’s questions about the project.

Hyundai Engineering & Construction could not be reached for comment.

Safaniyah produces about 1.3 million bpd and the latest expansion phase could boost output to up to 2 million bpd.

Chief executive Amin Nasser has confirmed that Aramco is eyeing a boost of almost 700,000 bpd from Safaniyah, but the precise timeline has yet to be disclosed.

Safaniyah offshore projects

In addition to the onshore deals, several leading international contracting giants are vying for up to 10 separate engineering, procurement, construction and installation deals involving offshore facilities at Safaniyah.

The projects are a part of Aramco’s coveted long-term agreement (LTA) arrangement with offshore contracting giants and are expected to be collectively worth more than $10 billion, Upstream understands.

The offshore contracts on offer are dubbed as contract release and purchase orders (CRPO) 104 to 113 and are likely to be awarded later this month, sources have suggested.

The project requires at least four big gathering platforms, 29 wellhead platforms and 22 water injection platforms, as well as an offshore accommodation facility.

Multiple segments of subsea pipelines, composite cables and topsides modification work at some existing facilities are also included.

About 200 kilometres north of Dhahran, Safaniyah began producing in 1957 but still has an estimated 37 billion barrels of heavy crude in place.

Aramco has been developing the oilfield through multiple expansion phases as it aims to maintain its production profile and halt the natural decline.

Capital expenditure plans

Aramco has narrowed its capital expenditure guidance for last year to between $48 billion and $52 billion as it stays on track with the largest upstream expansion plans in its history.

It expects its capital expenditure “to continue to increase until around the middle of the decade”, as it implements major capacity enhancement plans.

Nasser previously suggested that almost 60% of Aramco’s capital expenditure is likely to remain focused on the upstream sector in the short term, with the remaining 40% to be shared among its downstream, low-carbon and other businesses.

In recent years, Aramco has awarded billions of dollars worth of onshore and offshore projects involving massive capacity enhancement.

Its Berri, Zuluf, Marjan, Manifa, Safaniyah and Abu Safah oilfields are at the heart of Saudi Arabia’s long-term expansion plans.

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