6/28/2019 Saudi Aramco issues letters of intent for $15bn Marjan project

EXCLUSIVE: Saudi Aramco issues letters of intent

for $15bn Marjan project
27 JUNE 2019 4:17 PM BY INDRAJIT SEN (HTTPS://WWW.MEED.COM/AUTHOR/INDRAJIT-SENMEED-COM/)

US contractor McDermott has won the largest share of the Marjan

work; Saipem, Tecnicas Reunidas and Hyundai win significant
packages as well

Saudi Aramco has signed letters of intent (LoIs) with contractors for multiple packages as part of
its estimated $15bn plus Marjan Field Development megaproject (https://www.meed.com/saudi-
aramco-upstream-oil-development/), sources have told MEED.

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MEED has reported on the frontrunners for each of the engineering, procurement and
construction (EPC) contracts.

With approximately $5.2bn worth of awards from the two EPC contracts combined, US energy
contractor McDermott has won the largest share of the Marjan work.

Italy’s Saipem, Spanish contractor Tecnicas Reunidas and South Korea’s Hyundai have picked
up other $1bn-plus packages.

One of the sources said Aramco has set a date of 4 July for the formal contracts signing
ceremony.

Offshore packages

McDermott has emerged as the most successful bidder, winning two of the three offshore
packages on offer (https://www.meed.com/exclusive-saudi-aramco-evaluating-marjan-offshore-
packages-bids/) – packages 1 and 4. MEED had earlier reported that package 1 is worth around
$3.5bn and package 4 is estimated to be $1.7bn (https://www.meed.com/exclusive-aramco-
selects-contractors-two-marjan-offshore-packages/).

McDermott is in a consortium with state-owned China Offshore Oil Engineering Company

(COOEC) for package 1, while it made a solo bid for package 4.

Offshore package 2 has been awarded to Italian contractor Saipem

(https://www.meed.com/exclusive-new-frontrunner-emerges-saudi-aramco-marjan-offshore-
package/) for a value of around $1bn. Saipem beat India’s Larsen & Toubro Hydrocarbon
Engineering (LTHE), the initial favourite to win package 2 (https://www.meed.com/exclusive-
consortium-emerges-frontrunner-aramcos-marjan-offshore-package/), after the Italian firm made
a revised offer for the EPC contract following extended negotiations with Aramco.

McDermott emerged as the lowest bidder for all three offshore packages, sources have earlier
said. However, Aramco refusing to award all the offshore packages to one contractor – for
reasons of workload management – meant it had to look for other contractors to execute EPC
works on package 2.

Saipem is already working on package 3, another offshore segment of the Marjan megaproject,
for which it was awarded the almost $1.5bn contract in the fourth quarter of 2018.

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Onshore packages

Aramco’s Marjan scheme consists of five onshore packages (https://www.meed.com/exclusive-

lowest-bidders-emerge-saudi-aramcos-marjan-onshore-packages/) – 6, 9, 10, 11 and 12 – which
are all worth more than $1bn each, with package 6 valued at between $1.3bn and $1.6bn.

The following firms have won each of the packages:

Package 6 – Hyundai Engineering & Construction (South Korea)

Package 9 – Tecnicas Reunidas (Spain)

Package 10 – Saipem (Italy)

Package 11 – Tecnicas Reunidas (Spain)

Package 12 – Hyundai Engineering & Construction (South Korea) / Hyundai Engineering

(South Korea)

Aramco plans to construct a gas processing plant at Tanajib, which will be able to process 2.79
billion cubic feet of gas a day and 85 million barrels a day of condensates from the Marjan
offshore field, as well as associated gas from the Safaniya and Zuluf offshore fields.

The plant is expected to produce sales gas for Aramco’s Master Gas System and gas for
offshore re-injection/gas lift and sulphur production. The plant will be designed to produce
ethane, butane, propane, pentane and C7+ streams.

The five onshore packages for the Marjan project (https://www.meed.com/exclusive-contractors-

submit-bids-aramcos-marjan-onshore-packages/) relate to the construction of associated
facilities for the proposed gas plant.

Pipeline jobs

The Marjan megaproject also has a few pipeline packages, with the scope of work covering the
installation of pipelines from the main gas oil separation plant (GOSP) at Tanajib to the oil
processing facilities at Jubail, Ras Tanura and Tanajib.

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Work on the three pipeline installation sites forms packages 16, 17 and 18 of the Marjan project.
The packages have a combined worth of $400m, with the value of each package ranging
between $100m and $200m.

MEED has earlier reported that China’s Sinopec Services emerged as the lowest bidder for all
three packages (https://www.meed.com/exclusive-chinese-firm-lowest-bidder-aramco-pipeline-
packages/).

It is not known if Aramco has decided upon the winner for the pipeline EPC contracts, or if
Sinopec Services remains L1 on the packages.

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