Story by The Wall Street Journal
China’s Shandong Electric Power Construction Corporation, known as Sepco, is seen as the frontrunner in the bidding for an $800 million contract to build a natural gas compressor station for the Saudi Arabian Oil Company, according to five people familiar with the process.
Aramco, as the firm is known, is expanding its domestic natural gas network — already one of the largest pipeline systems in the world –which delivers about 8.4 million cubic feet of natural gas a day from Saudi Arabia’s main production areas in the Eastern Province to large demand centers in the central and western Regions.
Once completed, the network capacity will increase to 9.6 billion cf/d in early 2017 and 12.5 billion cf/d by 2018, mostly for use in power generation or heavy industry.
In May, eight international contractors submitted bids for the project, which is part of the second phase of Aramco’s Master Gas System Expansion project (MGSE). The plant will be built 160 kilometers southwest of Dammam in the Eastern Province.
Sepco is already constructing two compressor stations on the MGSE between Dammam and Riyadh, after being awarded the $1.3 billion contract in October 2014 during the first phase of the project.
“[Sepco] was always going to be a frontrunner on this because they have already mobilized a large workforce to the project,” said a senior executive from a rival bidder on the project. “They were the lowest bidder and were always in a good position.”
As well as the compressor station, the second phase also includes four large pipeline contracts spanning a total of 889 kilometers and worth a combined $1.3 billion. A decision on these packages will be made in early October, according to market sources familiar with the process.
Aramco was not available for comment.