KBR Secures Engineering Services Contract for Saudi Arabia's Yanbu Export Refinery Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--The American engineering, construction and service company KBR Incorporated (NYSE:KBR) (Houston, Texas) has been awarded a contract by the state-owned Saudi Aramco (Dhahran, Saudi Arabia) and ConocoPhillips (NYSE:COP) (Houston) to supply detailed engineering and procurement services for the Yanbu export refinery project.

KBR completed the front-end engineering and design work for the two companies at the refinery, and the new contract is an extension of the project KBR holds with Saudi Aramco and ConocoPhillips.

Under the new contract, KBR will supply engineering and procurement services for the utilities package, pipe racks, and interconnecting systems at the refinery to increase the facility's output to 400,000 barrels per day (BBL/d). The project is undergoing tendering for the engineering, procurement and construction contract before a final investment decision in 2010.

ConocoPhillips and Saudi Aramco signed a memorandum of understanding in 2006 to conduct a detailed investigation for the development of a $6 billion full-conversion refinery in the Yanbu Industrial City in Saudi Arabia. The refinery will process Arabian heavy crude and produce high-quality, ultra-low sulfur, refined products to meet the current and future standards of the United States and Europe. Under the memorandum, the project would be shared equally between the two companies.

The global financial crisis caused the partners to put the plans for the refinery on hold in 2007 as energy prices plunged. In May 2008, the two companies announced they would continue to fund the development of the project, and planned to proceed with the next phase, including calling for bids and initial site preparation.

By June this year, market improvements were such that Saudi Aramco and ConocoPhillips announced plans to re-launch the bidding process. The two firms invited prequalifying international and local businesses to bid for major packages and early work on the project.

Contracts for early work packages are scheduled to be awarded in November. Bids for the major package work, which includes the development of a coking unit, hydrocracker, crude facility, tank farm, gasoline unit, and high-voltage electrical works, are to be invited in the first quarter of next year. The final contracts for these packages will be awarded during the second quarter of 2010. Completion of the refinery complex is now scheduled for 2014.

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