Image Credits : Saudi Aramco chief executive Amin Nasser.Photo: VLADIMIR AFANASIEV
3 minutes read

Saudi Aramco selects Chinese contractor for $12 billion gas project

Saudi Arabia’s state energy giant Saudi Aramco has chosen China Petroleum Engineering and Construction Company (CPECC) for a key contract involving the expansion of the kingdom’s natural gas infrastructure.

The state-owned heavyweight is said to have finalised winners for up to 15 engineering, procurement and construction (EPC) packages for the third expansion phase of the multibillion-dollar Master Gas System Network (MGS-3) development.

The most recent contract awarded by Aramco is valued at $1.699 billion and entrusts CPECC with the EPC work required at the MGS-3 project with total investment exceeding $12 billion, CPECC said.

CPECC emerged as the winning bidder against a competitive field of 10 companies, including China’s Shandong Electric Power Construction Company and Turkey’s Mapa, with its commercial and technical proposals.

The workscope includes EPC work for the expansion of three booster stations along with the development of necessary support facilities.

Completion of this project, forecast for June 2028, is a strategic move to increase the supply of natural gas to a variety of industrial sectors within the region, according to the Chinese player.

Key winners
India’s Kalpataru Projects International (KPIL) and Larsen & Toubro have already confirmed the award of multiple EPC deals from Aramco for work on the MGS-3 project, Upstream reported.

Kalpataru said in a statement to the Mumbai-based BSE stock exchange earlier this year that “it has received a Letter of Intent (LoI) from Saudi Arabia’s energy major, Aramco, for carrying out EPC work for three packages for the third expansion phase of the MGS Network in Saudi Arabia.”

“The EPC scope covers laying of over 800 kilometres of lateral gas pipeline. The exact contract value of the three packages will be confirmed upon contract execution,” it previously noted.

Compatriot L&T also confirmed the award of a “major onshore gas pipeline project” in the Middle East region. The company describes a major award as one that is valued between $603 million and $1.2 billion.

“The scope of work comprises EPC of two new 56-inch pipelines along with associated scraper receivers and launchers and mainline isolation valve (MLIV) stations running parallel to the existing pipeline corridor,” the Indian contractor earlier stated.

While L&T did not reveal the name of the operator, Upstream understands that the award relates to the MGS-3 project.

Several other EPC contractors are also said to be among the winners of multiple deals involving the Master gas project.

The likely winners for other key pipeline packages include China’s Sinopec and Sepco, Mapa from Turkey and a leading German player, Upstream understands.

A few leading domestic Saudi contractors are also believed to have landed EPC deals from Aramco, but those names could not be confirmed.

The expansion under MGS-3 is anticipated to elevate Saudi Arabia’s capacity to address its escalating energy demand and to pivot away from liquid fuels, aligning with the kingdom’s ambitions to diversify its energy sources and reduce its carbon footprint.

Gas field expansion

Aramco is executing the expansion of multiple onshore and offshore gas fields, in line with its strategy to massively boost gas output in the country by the end of this decade.

The company this year stated that reserves at its Jafurah unconventional field have risen by at least 15 trillion cubic feet of gas.

Aramco is progressing on its $100 billion-plus Jafurah gas field development project that is being executed in multiple phases.

Jafurah is expected to reach a production capacity of 2 billion cubic feet per day by 2030, lifting the company’s overall gas production capacity by 50%.

Saudi Arabia’s dry natural gas production exceeded 4 Tcf per annum for the first time in 2020.

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