Saudi Aramco still evaluating Jizan gas supply contract

Oil company in discussions with Germany’s Linde to accept third-party ownership

State-owned oil company Saudi Aramco is still evaluating bids for the air-separation unit (ASU)/oxygen supply package at its $8.5bn gasification project at Jizan in the southwest of Saudi Arabia.

Sources in the kingdom state that the issue is the contract model that will be used, with Aramco wanting a third-party ownership scheme, such as build-operate-transfer (BOT) rather than a design-build-operate (DBO) model, to be adopted.

Germany’s Linde is the lowest bidder for the scheme with a bid of about $1.4bn based on the DBO model. A joint venture of the local Acwa Power and the US’ Air Products has submitted a much higher bid of about $2bn, but that is for the BOT model.

“Aramco is very keen on as much third-party ownership as possible, so it has a decision to make based on that,” says a Saudi Arabia-based source familiar with the scheme. “Linde’s price is much lower, but it involves far less risk than what the Acwa Power joint venture is proposing. Aramco has to decide whether it is happy with DBO or if it should insist on the successful bidder carrying out the scheme based on BOT.”

MEED reported in late May that China Harbour Arabia had been awarded the water intake package in a deal worth about $600m.

Contracts have also been awarded to Italy’s Saipem, which is responsible for the gasification and sulphur recovery unit packages; Spain’s Tecnicas Reunidas, which has been awarded the offsites and utilities; and China’s Sepco III, which will build the power plant.

Aramco is investing at least $15bn in Jizan with the firm building a 400,000 barrel-a-day (b/d) refinery and the 2,400MW integrated gasification combined-cycle (IGCC) power plant.

The UK/Dutch Shell Group is providing the gasification and acid-gas removal technologies, and will also provide engineering services for the scheme.

The gasification process works by mixing hydrocarbons, such as coal or heavy oil, with oxygen to produce synthesis gas (syngas). This is then used to fire a turbine and create power. The gasification unit will produce about 2.11 million cubic metre units an hour of syngas.

Following the spiralling of the project’s budget to more than $10bn, Saudi Aramco has managed to lower the cost to about $8.5bn. This was achieved by carrying out value engineering as well as lowering the capacity of the power plant. However, the gasification unit was not altered, meaning a higher power capacity can be added at a future date if required.