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Saudi Aramco has awarded a key contract as part of its larger project to boost gas compression capacity at the Shedgum and Uthmaniya processing plants in the kingdom’s Eastern Province.

The Shedgum and Uthmaniya plants currently receive approximately 870 million cubic feet a day (cf/d) and 1.2 billion cf/d of Khuff raw gas, respectively. Through this multibillion-dollar project, Aramco aims to increase the compression and processing capacity of the two plants, as well as construct new pipelines to enhance gas transport.

Saudi Arabia-based Saipem Nasser Saeed Al‑Hajri Contracting Company (SNSH), a joint venture of Italian contractor Saipem and local contractor Nasser Saeed Al‑Hajri and Partners Company for Contracting, has won the contract for EPC works on the Uthmaniyah gas compression plant package.

The value of the contract won by SNSH is estimated to be $1.24bn, sources told MEED. Milan-headquartered Saipem declared the share of its contract value to be €900m ($1.04bn), adding that the duration of EPC works is 42 months.

The scope of work on the package involves the EPC of a new compression plant serving the non‑associated gas field of Uthmaniyah, Saipem said in its statement, adding that “the new compression plant will extend the production life of the field, helping to support the growing energy demand of the Kingdom of Saudi Arabia”.

The contract for the Uthmaniyah gas compression plant package is the first EPC project awarded under Aramco’s National EPC Champion programme, Euronext Milan-listed Saipem said.

Shedgum and Uthmaniyah gas compression project

The contract awarded by Aramco for the Uthmaniyah gas compression plant is one of nine EPC packages comprising the overall Shedgum and Uthmaniyah gas compression project. The list of packages is as follows:

1. Shedgum gas compression facility and SGP in-plant works
2. Uthmaniyah gas compression facility and UGP in-plant works
3. Shedgum gas compression pipelines package
4. Uthmaniyah gas compression pipelines package
5. Shedgum and Uthmaniyah central temporary construction facilities
6. Shedgum and Uthmaniyah early works site preparation
7. Operation and maintenance of Saudi Aramco Project Management Team temporary construction facilities and accommodation
8. Shedgum and Uthmaniyah gas compression plant PIA
9. Shedgum and Uthmaniyah gas compression plant PSA.

Aramco has awarded the contract for the Shedgum and Uthmaniyah early works site preparation (package 6) to local firm Al-Shalawi International Company Trading and Contracting, sources told MEED.

Additionally, Aramco is understood to be in discussions with Indian contractor Larsen & Toubro Energy Hydrocarbon (L&T), among other bidders, for the Shedgum gas compression facility and SGP in-plant works package (package 1), as per sources.

Separately, the Saudi energy giant was said to be in negotiations with a consortium of China’s Sinopec and Dammam-based Al-Qahtani Pipe Coating Industries for the pipeline package related to the Uthmaniyah gas compression plant (package 4), the sources further said.

However, Sinopec and Al-Qahtani fell short of providing bond guarantees and failed to meet other requirements set by Aramco, resulting in a split of their consortium, sources told MEED, adding Aramco could now start discussions with other bidders for the package.

Meanwhile, Khobar-based Arkad Engineering & Construction has emerged as the lowest bidder for the Shedgum gas compression pipelines package, with Aramco expected to award the contract within June, according to sources.

Contractors submitted bids for packages of the Shedgum and Uthmaniya gas compression capacity expansion project in January, MEED previously reported.

The Saudi energy giant is understood to have started the solicitation of interest process for the main EPC contract tendering exercise in the fourth quarter of 2024.

Aramco subsequently issued the tenders for the EPC packages of the scheme during the second quarter of last year and set an initial bid submission deadline of 17 August.

Aramco then extended the bid submission deadline to 17 November, 7 December, and then to January, according to sources.

In line with its aim of increasing gas production and processing capacity by 80% by 2030, with 2021 as its baseline, Aramco is investing significant capital in gas projects in the kingdom.