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Tue 15 Sep 2015 03:02 PM

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Tecnicas and Petrofac hired to build $4.7bn Saudi gas project

Sources say Spanish and British firms have been selected to build the Fadhili gas plant

Tecnicas and Petrofac hired to build $4.7bn Saudi gas project
(Photo for illustrative purposes only)

Spain's Tecnicas Reunidas and Britain's Petrofac have been selected for contracts worth as much as $4.7 billion to build the Fadhili gas plant in Saudi Arabia for state oil company Saudi Aramco, industry sources said on Tuesday.

"They received notification last week; a letter of intent," said one of the sources, who declined to be identified as the information isn't public.

Petrofac and Tecnicas declined to comment. Saudi Aramco said it does not comment on its business plans.

Aramco's decision to move ahead with the project at Fadhili is a sign that Saudi Arabia continues to make big investments that it views as key to its economic future, despite slowing or shelving some projects regarded as low priority as the plunge in oil prices since last year impacts state finances.

The new plant is to have a processing capacity of 2.5 billion standard cubic feet per day (scfd) of sour gas from the onshore Khursaniyah and offshore Hasbah fields.

The project is split into three construction packages for the gas processing unit, utilities and offsite facilities such as nitrogen, steam, power and water systems, and sulphur recovery.

Italy's Saipem and South Korea's Daelim Industrial had previously been said to be among the bidders, sources told Reuters in July.

Tecnicas bid for two of the packages on its own, and for the third in conjunction with South Korea's GS Engineering and Construction, according to a second industry source.

Ultimately, the Spanish firm won the two packages in which it bid solo: for the gas processing unit for as much as $2 billion and for utilities and offsites, worth as much as $1 billion, according to the first industry source and a separate source.

Three sources confirmed that Petrofac won the package for sulphur recovery worth as much as $1.7 billion.

Aramco said in its 2014 annual review published in May that the Fadhili gas plant was on track to come onstream by 2019.

Fadhili, together with Aramco's other gas projects in Wasit and Midyan, are slated to add more than 5 billion scfd of non-associated gas processing capacity, which will help the company meet soaring domestic demand for industrial use and electricity generation in the world's largest oil exporter.

Gas production remains a top priority for Saudi Arabia as it wants to limit direct crude oil burning for electricity, thereby preserving its ability to increase oil exports.

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