Saipem scores $500 million for work on two offshore oil projects in Middle East

Italy’s engineering, drilling, and construction services provider Saipem has got its hands on multimillion-dollar assignments on two projects off the coast of Saudi Arabia with the country’s oil and gas heavyweight Aramco. This will enable the Saudi player to maintain long-term oil production from the three fields these two projects cover.

The offshore project duo, awarded under the existing long-term agreement (LTA) with Saudi Aramco, is said to consolidate Saipem’s positioning in the Middle East and will bring approximately $500 to the Italian firm.

The first project will enable the company to handle the engineering, procurement, construction, and installation (EPCI) of a crude trunkline of about 50 km with a diameter of 42” for the Abu Safah field in the shallow water of the Arabian Gulf, southeast of the Berri field, and is jointly owned by Saudi Arabia and Bahrain. 

The field’s production capacity of 300,000 barrels per day is split equally between the two countries, thus, Saudi Arabia’s equity share is 150,000 barrels per day. This oil is a sour medium crude, with an average gravity of 29◦ API and 2.85% Sulfur content, which is sold primarily to East of Suez markets, notably to the Far East and Southeast Asia.

On the other hand, Saipem’s scope of work for the second project entails the production maintenance programs of the Berri and Manifa fields. The first field spans both onshore and offshore areas along the eastern coast of Saudi Arabia and was discovered in 1964, with crude oil production commencing in 1970. The Berri gas plant started operations in 1977.

The Manifa field was discovered in 1957 as a huge six-reservoir field stretching 45 km long and 18 km wide, lying in less than 15 meters of water. The oil production at the field is said to provide the energy equivalent to meeting the needs of 100 million people. With an initial investment of $10 billion in 2006, Aramco embarked on a quest to find a way to produce oil from this shallow, ecologically-delicate, offshore oil field.

To this end, 27 man-made islands were designed to be created, each the size of ten soccer pitches, made from 45 million cubic meters of sand reclaimed from the seabed to act as onshore drill sites above the offshore oil field, linked by a 41 km causeway. Plans were drawn for 13 bridges, 13 offshore platforms, 15 onshore drill sites, 350 new wells, injection facilities, multiple pipelines, and a 420-megawatt heat and electricity plant.

The oil field came online in 2013 while the ultimate production target of 900,000 per day was reached by 2017. The Manifa Central Processing Facility was developed to process the oil, with three identical gas-oil separation plants (GOSPs), each designed to treat 300,000 barrels per day for delivery to other refineries.

Saipem’s assignments with Aramco come after the firm secured work in Angola with TotalEnergies for a deepwater project worth $3.7 billion.

Aramco is set on bolstering its liquefied natural gas (LNG) arsenal in the U.S. as confirmed by a non-binding heads of agreement (HoA) for equity and offtake from the Port Arthur LNG Phase 2 (PALNG2) natural gas liquefaction and export terminal expansion project in Southeast Texas with direct access to the Gulf of Mexico.

Shortly before this, the firm inked another HoA  to purchase 1.2 million tonnes per annum (mtpa) of LNG for 20 years on a free-on-board basis from NextDecade’s Train 4 of the Rio Grande LNG (RGLNG) project at the Port of Brownsville, Texas.