L&T partnership with Subsea 7 bears fruit as Saudi Aramco dishes out offshore contracts

A pairing of Indian engineering giant Larsen & Toubro (L&T) and Oslo-listed Subsea 7 has landed multiple offshore contracts from Saudi Aramco under the latter’s coveted long-term agreement (LTA) framework to which a select group of international contractors have access.

L&T confirmed the award of multiple contracts on Tuesday, without naming the client or the offshore fields involved.

“The scope of work comprises engineering, procurement, construction & installation (EPCI) of offshore structures and upgradation of existing facilities,” it noted.

Saudi Aramco is yet to respond to a query on the EPCI awards, but well-informed sources told Upstream that the projects have been jointly awarded to the L&T, Subsea 7 grouping, and involve Aramco’s contract release and purchase orders (CRPOs) 98, 120 and 121.

Upstream recently tipped the L&T-led consortium as one of the key contenders for a batch of LTA contracts among an 11-contract package currently on offer.

CRPO 98 includes work on the further development of Aramco’s giant Zuluf oilfield with a project scope that involves both new infrastructure and the upgrading of multiple production deck modules, sources said.

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CRPO 120 includes one new PDM for the Hasbah field, along with subsea pipelines and cables, while CRPO 121 envisages the EPCI of up to 12 offshore platform jackets for Aramco’s Manifa oilfield, project watchers said.

Additional awards

In addition to the trio of contracts awarded to L&T, Subsea 7, Aramco is expected to award within days, at least 8 more LTA deals.

The contracts which are close to being finalised include CRPO 97, 99, 100, 101, 117, 118, 119, and 122, sources told Upstream.

While the value of the three contracts awarded to the L&T-led grouping could not be confirmed by Upstream, the 11 contracts awarded together are valued at close to $3 billion, Upstream was told.

Likely winners for the other contracts could include US-based McDermott International, Abu Dhabi’s National Petroleum Construction Company (NPCC) and Italy’s Saipem, Upstream understand.

Aramco is looking to spread the workload, so each of these front runners is expected to land more than one package from Aramco.

Another source suggested that China’s Offshore Oil Engineering Corporation (COOEC) might also be in the frame to win one CRPO award, but this could not be confirmed by Upstream.

Capacity expansion

With capital expenditure set at a guidance range of between $45 billion and $55 billion this year, Aramco has highlighted its intent to swiftly scale up its sustainable oil production capacity to 13 million barrels per day by 2027, up from the existing 12 million bpd capacity.

Most of the incremental volumes in Saudi Arabia are expected to come from its key offshore oilfields during the next few years, requiring multiple phases of investments.

The 11 EPC deals now in the contracting phase together involve work on the country’s Abu Safah, Manifa, Zuluf, Marjan, Hasbah and Safaniyah oil and gas fields, Upstream understands.

LTA players

Aramco’s LTA arrangement includes contractors or consortia that have been qualified to bid on the country’s brownfield and offshore incremental projects.

Along with the potential front runners for the latest multiple LTA tenders, other key players are Malaysia’s Sapura Energy; a consortium of UK’s Lamprell with Dutch player Boskalis; South Korea’s Hyundai Heavy Industries; Dynamic Industries of the US; and a grouping of Technip Energies and Malaysia Marine & Heavy Engineering.

Aramco recently launched multiple tenders for the additional offshore infrastructure required at its Manifa and Safaniyah fields, as it continues to invest heavily in strategic oil projects, Upstream has reported.

Along with the new CRPOs, Aramco is currently tendering for 10 separate LTA projects involving Safaniyah, touted to be worth upwards of $10 billion combined, project watchers said.

More than two dozen coveted CRPOs are currently in the tendering phase, with Aramco’s bid activity soaring to record highs, led by its ambitious capacity expansion plans.