Aramco surprises LTAs with Berri mega-tender

22 May 2018, Week 20, Issue 676

Saudi Aramco offered its favoured quintet of offshore contractors a new and lucrative opportunity in late April in the form of a tender for a major package of work on the multi-billion dollar expansion of the maturing Berri oilfield.

The scheme is one of three launched by the producer since the onset of oil market recovery early last year that are aimed at raising – rather than merely maintaining – sustainable oil output at the ageing Gulf fields while adding gas-processing capacity. 

Bids have been invited by late June for an estimated US$1.5 billion engineering, procurement, construction and installation (EPCI) contract covering the offshore portion of the so-called Berri Increment Programme, which calls for the production of an additional 250,000 bpd of Arabian Light crude and increasing natural gas liquids (NGL) recovery.

Expected to be the largest job tendered this year among the five signatories of Aramco’s so-called long-term agreements (LTAs), the contract covers 10 oil production deck modules (PDM) each weighing around 1,500 tonnes, a PDM for water injection, a tie-in platform and around 100 km of subsea pipelines.

This grants automatic and exclusive qualification to bid for the majority of EPCI work on the kingdom’s offshore fields.

When the estimated US$6 billion scheme was launched last year, there was speculation that the scale of the facilities required and the volume of EPCI work under way or planned elsewhere in Aramco’s offshore portfolio would persuade the company to look beyond the LTA pool. The current pool comprises Dynamic Industries and McDermott, both of the US, India’s Larsen & Toubro (L&T) with Oslo-listed Subsea-7, the UAE’s National Petroleum Construction and Italy’s Saipem.

The state giant is currently assessing proposals from several companies applying to be added to the LTA list – partly as a response to the strains created by the current workload – but a decision is unlikely to be made in time to affect the Berri selection.

Applications to prequalify for the offshore EPCI contracts on an even-larger expansion planned at the Marjan field were sent to more than 10 companies during the first quarter.

Canada’s SNC Lavalin was awarded an engineering and project management services contract on the Berri project in early 2017 – including front-end engineering and design (FEED) on the onshore components.

This will comprise a 250,000 bpd gas-oil separation plant (GOSP) at the existing Abu Ali Gas Plant and the addition of facilities at the nearby Khursaniya Gas Plant to process 40,000 bpd of condensate.

Pre-engineering, procurement and construction (Pre-EPC) services are scheduled for completion in August and Aramco is expected to issue EPC tenders for the onshore packages by the end of the year.

The Berri field is located partly onshore and partly offshore on the east coast north of Ras Tanura and currently produces around 250,000-300,000 bpd. 

However, the asset has been in production since the late 1960s and, in common with the other Gulf fields, requires ongoing maintenance and redevelopment to sustain output – under a so-called Maintain Potential Programme launched early last decade that is the source of the bulk of work apportioned to the LTA contractors.

A package currently out to bid among the five firms covers a combined five PDMs at Berri and at the supergiant Safaniya field. Before the new Berri tender, the largest contract in the LTA pipeline – worth an estimated US$700-800 million – was that covering the seventh phase of redevelopment at the estimated 37 billion barrel Safianiya field, for which an award remains pending.

The narrowness of the Berri EPCI invitation was not the only surprise: attention had been focused on the early stages of the contracting process getting under way for the estimated US$15 billion Marjan Oilfield Development Programme – which Aramco was known to be intending to fast-track, in its presumed eagerness to realise the additional supplies of much-needed gas envisioned. The project calls for an increase in crude capacity of some 300,000 bpd and the installation of a new 2.8 bcf (79 mcm) per day gas plant.

The offshore prequalification invitation covered two packages – one encompassing a giant new GOSP and the other calling for a cap gas production network. Solicitations of interest were also issued during the first quarter for five onshore packages. Australia’s WorleyParsons was selected for the project management and FEED contract on the offshore facilities and the onshore pipelines in July. Marjan is located in the north-east of the kingdom’s maritime waters close to the border with Iran.

The third major offshore field expansion project aims to add 600,000 bpd of Arabian Heavy capacity at the Zuluf field and is at an earlier stage of development – with the US’ Jacobs Engineering having started work in January on an engineering and project management services contract awarded late last year.

Edited by

Ian Simm

Editor

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