India's Punj Lloyd Secures Contract to Construct Pipeline for Saudi Aramco's Yanbu Refinery Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading Indian engineering, procurement and construction (EPC) contractor Punj Lloyd Limited (BSE:532693) (Gurgaon, Haryana) has secured a contract to build offshore pipelines for the Yanbu refinery, which is being developed by Saudi Aramco (Dhahran, Saudi Arabia). As part of the agreement, Punj Lloyd will undertake EPC activities for steel pipelines with diameters of 36 to 60 inches. The pipelines will carry fuel gas, iso-butane, diesel, drinking and industrial water, gasoline and benzene. Punj Lloyd also will construct reinforced thermosetting plastic pipelines with diameters of 133.8 to 114.1 inches, which will serve as return pipelines and carry seawater, and provide electrical, control and instrumentation, and custody metering systems. The entire project, which will be executed by Dayim Punj Lloyd Contracting Company (Al-Khobar, Saudi Arabia), a subsidiary of Punj Lloyd, is scheduled to be completed in three years.

According to Adnan Abduljawad, the chief executive officer of Dayim Punj Lloyd, the Yanbu pipeline project is the company's first contract in Saudi Arabia. Punj Lloyd has a strong presence and experience in executing EPC contracts in the Middle East. In May, the company, in association with Tecnicas Reunidas S.A. (MCE:TRE) (Madrid, Spain), secured a $462 million contract to deliver a gas package for the Shah gas project developed by Abu Dhabi Gas Development Company(Abu Dhabi, United Arab Emirates). The contract includes supply of inter-pad, overhead, flow and transfer lines.

In 2006, Saudi Aramco, which is Saudi Arabia's biggest petroleum refining entity, decided to proceed with its $12 billion Yanbu refining complex. Saudi Aramco manages proven crude oil and gas reserves of 260 billion barrels per day and 263 trillion cubic feet, respectively. Yanbu, which is in the Al-Madinah province, is one of the most important ports in the country. Saudi Aramco and ConocoPhillips (NYSE:COP) (Houston, Texas) had joined hands in 2008 to develop the refinery project. However, in April this year, ConocoPhillips pulled out of the Yanbu refinery project on the grounds that a refinery project was not consistent with the company's current strategy to focus on exploration rather than on downstream facilities. KBR Incorporated (NYSE:KBR) (Houston) completed the front-end engineering and design work for the refinery. The project was delayed due to the global economic slowdown. On commencing operations, the Yanbu refinery will process 400,000 barrels per day of heavy Arabian crude and produce 6,300 tons per day of coke; 263,000 barrels per day of sulfur diesel, with ultra-low levels of sulfur; 1,200 tons per day of sulfur; and 900,000 barrels per day of gasoline.

The Yanbu refinery is the second project to be planned by Saudi Aramco in the country. The company is also developing another refinery at Jubail, which will draw feedstock from the proposed Manifa gas fields. The refinery will be constructed as a joint venture with Total S.A. (NYSE:TOT) (Paris, France). The offshore gas fields are slated for commissioning in 2011. The Yanbu refinery is one of the four major refineries planned by Saudi Aramco to boost Saudi Aramco's refining capacity from 2.1 million to 3.8 million barrels per day.

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