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Four contractors bidding on $1 billion Luberef Expansion

Saudi Aramco to upgrade Yanbu Lube Oil Refinery

Saudi Aramco and Jadwa Investment have received the tenders from four engineering companies bidding on the expansion of Luberef Yanbu Lube Oil Refinery Expansion.

The Saudi Aramco Lubricating Oil Refining Company (Luberef) is operating the lube oil refineries of Yanbu and Jeddah under the name of Saudi Aramco and Jadwa Investment  

Established in 1978 as a joint venture between Saudi Aramco and ExxonMobil, the both companies had shared interests:

 – Saudi Aramco 70% is the operator.

 – ExxonMobil 30%

Then in 2007, the Saudi investment company Jadwa Industrial Investment Company acquired ExxonMobil‘s stake so that today the Luberef facilities are fully operated by Saudi Aramco.

Luberef is one of the largest supplier of high quality based-oil greases and lubricants supplying the Saudi domestic market and exporting to the GCC Countries, Middle East and East Africa.

Actually the total production capacity of Luberef refineries in Jeddah and Yanbu refineries is about 550,000 t/y based-oil lubricants.

From its strategic locations in Yanbu and Jeddah, Luberef exports one of the most common grades portfolio of based-oil products and also some refinery by-products such as Furfural extracts.

The rapid growth of the industry and economy in Saudi Arabia has significantly increased the demand for lubricants.

Then the numerous on going projects of the Saudi flagships, Saudi Aramco and Sabic, together with the international oil companies ExxonMobil, Dow Chemicals, Total, etc… are calling for further consumption.

In addition the the nature of the Saudi industry is evolving with large metal projects and some automotive manufacturing plant (Tata – Jaguar-Land Rover) for the first time in the Kingdom

In front of these business opportunities, Saudi Arabia is still importing the high quality type-three oil especially required for the car industry.

For these reasons of market growth and evolution of the demand toward higher added value based-oil lubricants, Saudi Aramco decided the Luberef Yanbu Lube Oil Refinery Expansion project.

Jacobs completed the FEED on Luberef Expansion

On February 2011, Saudi Aramco awarded Jacobs Engineering (Jacobs) the front end engineering and design (FEED) contract for the Luberef refinery expansion project.

In parallel Saudi Aramco selected KBR’s technology for the Solvant De-Asphalting (DSA) process.

Since 2008 Jacobs is well established in Saudi Arabia with the acquisition of 60% of Zamel & Turbag Consulting Engineers (ZATE) to become Jacobs ZATE.

As such Jacobs ZATE could be qualified by Saudi Aramco according to its new General Engineering Services Plus (GES+) initiative for detailed engineering, front end engineering and design (FEED), consultancy and management work.

Therefore Jacobs‘s office in Leiden, Netherlands, specialized in lube oil refineries could perform the Luberef refinery expansion front end engineering and design (FEED) with the support of its:

 – Jacobs Al Khobar office in Saudi Arabia for the infrastructure and services

 – Numbai office in India for the detailed design of selected packages

From the front end engineering and design (FEED) work performed by Jacobs, the Yanbu Lube Oil Refinery Expansion project should require $1 billion capital expenditure to double the actual capacity of 280,000 t/y.

The Luberef expansion project includes:

 – New lube hydrocracker with 23,000 b/d capacity

 – Catalytic iso-dewaxing and hydrofinishing unit

 – Sour gas absorption

 – Sulfur Treatment complex and prilling units

 The project extension will also cover:

 – Vacuum distillation unit capacity increase from 26,000 b/d to 40,000 b/d

 – Propane de-asphalting from 6.500 b/d to 12.500 b/d

 – Asphalt capacity to 12,000 b/d

– Additional storage tanks

 – The upgrade and extension of the electrical facilities

Only four bidders on Luberef Refinery EPC contract

In April 2012, Saudi Aramco proceeded to the call for tender for the Engineering, Procurement, Construction (EPC) contract with a month ahead of project schedule with a deadline given for end of June.

Saudi Aramco had decided to award the EPC contract in one single Lump Sum Turn Key EPC contract.

More than 12 engineering companies were pre-qualified by Saudi Aramco, but because of too short number of complete bids to be submitted on time, Saudi Aramco extended the deadline to end of August.

In addition Saudi Aramco gave the opportunity to the bidders to quote on an “in Kingdom” and “out of Kingdom” basis, so that the winner will not have local content requirements to meet for this project.

In the meantime, Saudi Aramco made the final investment decision (FID) in August 2012.

After the two months bid deadline extension, only four engineering companies submitted an offer.

 – Hyundai Engineering & Construction from South Korea

 – Saipem from Italy

 – Samsung Engineering from South Korea

 – Tecnicas Reunidas from Spain

Saudi Aramco will evaluate the offers for the EPC contract on the forth quarter 2012 in expecting a decision on the first quarter 2013 in targeting the completion of the Luberef Yanbu Lube Oil Refinery Expansion project by first quarter 2015.

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