Shoaiba Storage tendered as In-Kingdom EPC contract
Saudi Aramco is continuously adjusting its contractual strategy for the construction of the hydrocarbon bulk storage terminal planned at the mi-distance of the Saudi Arabia west coast on the Red Sea.
Located 220 kilometers south of Jeddah, Shoaiba is the city on the west coast at the shortest distance from the east coast where are so far concentrated most of Saudi Aramco operations.
Since 2011, when the Shoaiba Terminal project has been decided, Saudi Aramco reviewed its contractual format to qualify the potential bidders and organize the call for tender for the design and construction.
At that time investing directly in midstream projects is not a priority leading Saudi Aramco to plan the development of the Shoaiba Terminal project on build-own-operate-transfer (BOOT) contractual basis at that time.
Since then, the Shoaiba Terminal project changed dimension because of Saudi Aramco overall program on the west side of the Kingdom.
The development of the deep offshore oil and gas resources in the Red Sea have become a priority for Saudi Aramco
The multi-billion capital expenditure Jizan project in the south of Saudi Arabia also contributes to balance industrial activities between the Eastern Province and the west coast.
But the existing midstream infrastructures operated by Saudi Aramco are not prepared to support these major developments and consequences to store and transport the corresponding hydrocarbon products between the different regions of Saudi Arabia.
In this context Saudi Aramco decided to convert the Shoaiba Terminal BOOT contract into conventional engineering, procurement and construction (EPC) contract.
Four bidders to Saudi Aramco Shoaiba IK-EPC contract
In 2013, Mustang and its local partners Al-Hejailan and DAR PI completed the front end engineering and design (FEED) work on the Shoaiba Terminal project to include:
- Tank Farm
- Marine Terminal
Designed to store transportation fuels such as diesel, gasoline and benzene, the Shoaiba Terminal should have a capacity of 400,000 barrels.
Mustangwas selected for the FEED contract because of its qualification in Saudi Aramco as General Engineering Services Plus (GES+) provider, meaning that the FEED contract should have been carried out in Saudi Arabia.
While moving into the EPC phase, Saudi Aramco required the execution contract to also be performed out of Saudi Arabia since Shoaiba Terminal project does not require specific expertise.
Therefore Saudi Aramco qualified seven bidders for the Shoaiba Terminal EPC contract to be awarded as In-Kingdom EPC (IK-EPC).
Because of this new constraint appearing at the tendering stage, only four companies submitted a technical and commercial offer.
Saudi Aramco is planning to make the final investment decision (FID) and sanction this IK-EPC contract on second half of 2014 in expecting the Shoaiba Terminal to start first commercial operations on early 2016.
