Samsung submitted the lowest bid on Luberef refinery
Saudi Aramco and Jadwa Investment are reviewing the final technical and commercial offers submitted by the engineering companies for the engineering, procurement and construction (EPC) contracts of the Luberef Yanbu Lube Oil Refinery Expansion.
Estimated to require $1 billion capital expenditure, this Luberef Yanbu Lube Oil Refinery Expansion project was tendered for the EPC contracts in two packages.
Luberef designed the Lube Oil Refinery Expansion project to:
- Add new capacities and processing units
- Revamp and upgrade existing facilities
For the call for tender of the EPC contracts, Luberef made two packages, for the greenfield portion and the brownfield expansion.
The main package includes the greenfield units:
- 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 second package comprises the brownfield work in expanding:
- Vacuum distillation unit capacity increase from 26,000 b/d to 40,000 b/d
- Propane de-asphalting unit from 6.500 b/d to 12.500 b/d
- Asphalt capacity to 12,000 b/d
- Additional storage tanks
- Piping modifications to connect the new units
- New water cooling system with cooling tower
- The upgrade and extension of the electrical facilities
With 550,000 t/y of lube oil production capacity, this Saudi Aramco Lubricating Oil Refining Company (Luberef) project is to add high grade lubricants, the type-three oil, still imported in Saudi Arabia.
Jacobs and Samsung rewarded from their localization
On February 2011, Jacobs Engineering had been awarded the front end engineering and design (FEED) contract from Saudi Aramco for the Luberef refinery expansion project.
One of the key factor of success for Jacobs had been to establish since 2008 in Saudi Arabia a local company with the acquisition of 60% of Zamel & Turbag Consulting Engineers (ZATE) to become Jacobs ZATE.
From this local presence Jacobs ZATE could work on fulfilling Saudi Aramco‘s requirements to meet its General Engineering Services Plus (GES+) initiative.
Applicable to all the detailed engineering, front end engineering and design (FEED), consultancy and management works, Jacobs could be qualified by Saudi Aramco
To meet the General Engineering Services Plus (GES+) initiative requirements, Jacobs organized the FEED work for the Luberef refinery expansion around three offices:
- Leiden in Netherlands, as global center of expertise for the lube oil refineries.
- Al Khobar in Saudi Arabia to design the infrastructure and provide services
- Mumbai in India to perform the detailed design
When Jacobs completed the FEED on early 2012, Saudi Aramco organized the call for tender of the two Engineering, Procurement, Construction(EPC) contracts on Lump Sum Turn Key basis.
Saudi Aramco qualified 12 engineering companies with closing date at the end of June.
But because of the too short number of bidders, Saudi Aramco postponed the dead line to end of August and opened the opportunities for the bidders to submit offers ”in Kingdom” and “out of Kingdom”.
In August, Saudi Aramco made the final investment decision (FID) for the Luberef project.
Four engineering companies submitted finally an offer.
- Hyundai Engineering & Construction from South Korea
- Saipem from Italy
- Samsung Engineering from South Korea
- Tecnicas Reunidas from Spain
Currently Saudi Aramco evaluates the details of the technical and commercial offers submitted.
Samsung is reported the lowest bidder with an “In-Kingdom” proposal aligned with Saudi Aramco “In-Kingdom EPC” (IK-EPC) requirements to increase the added value in Saudi Arabia.
The contract should be awarded on first quarter 2013 for completion in 2015.
In selecting Jacobs ZATE for the FEED and Samsung’s IK-EPC solution for the EPC contracts, for this Luberef Yanbu Lube Oil Refinery Expansion project, Saudi Aramco gives a strong signal to see the GES+ and the IK-EPC initiatives in place in 2013 to support the Saudi localization of its capital expenditure.
