SAUDI ARABIA - Shaybah.

A super-giant discovered in the early 1970s - with light/sweet oil in place having been estimated at about 14.3 bn, including 7 bn barrels recoverable, plus 25 TCF of gas - Shaybah came on stream in mid-1998 for tests. Its capacity reached 500,000 b/d in early 1999 and it was inaugurated in March 1999. Other projects include the phase 2 expansion of Shaybah, which will add 300,000 b/d of extra light crude by 2008.

A group of Jacobs Engineering with SNC Lavalin and the local Saudi Consulting Services (SaudConsult) is carrying out the FEED package on the expansion of Shaybah. The Shaybah expansion involves installation of new wet crude handling facilities, dehydration and desalter units, a GOSP, pipelines and gas reinjection facilities. The total project cost is estimated to be about $3,000m.

AEL from the field is transferred through a pipeline to Abqaiq for blending with AL. About 880 MCF/d of gas is reinjected into the field (see background in Vol. 61, No. 14).

The Divided Zone: The divided (formerly "neutral") zone is shared equally by Kuwait and Saudi Arabia, under a treaty signed on Dec. 2, 1922 to settle a territorial dispute between the two countries. The treaty was revised on July 7, 1965. The joint administration accord was supplemented in 1969 by an agreement whereby the northern half was administered by Kuwait and the southern part was administered by Saudi Arabia. An undivided half interest in all resources was maintained over the entire area by each state. A joint Kuwaiti-Saudi committee oversees exploitation of these resources.

Texaco (now part of Chevron), which has the onshore concession to 2010 in the northern half, shares its area's oil production equally with Kuwait. Saudi Arabia gets taxes and royalties on Texaco's share.

Texaco's oil production capacity reached 300,000 b/d in mid-1999. It had risen after the Gulf war from 100,000 b/d in 1991/92 to 120,000 b/d in 1995 and 270,000 b/d in late 1998 and the first half of 1999. This should rise to 420,000 b/d this year. Texaco operates three onshore oilfields: Wafra, South Fuwaris and South Umm Gudair (see their profiles in the Kuwait survey in Vol. 64). The former US operator onshore, Getty Oil, was sold to Texaco in 1984.

Aramco Gulf Operations Co. (AGOC) is a unit of Saudi Aramco set up at end-February 2000 to take over half the operations of Arabian Oil Co. (AOC) of Japan - which had the offshore concession to February 2000 on the Saudi side and to Jan. 4, 2003 on the Kuwaiti side. AOC lost both concessions and now works as a service contractor for Kuwait Gulf Oil Co. (KGOC).

The offshore area's oil production capacity is 300,000 b/d maintained since the 1980s. The area has two producing oilfields: Khafji which is offshore and Hout which is onshore. It also has a huge but undeveloped offshore gas field, Dorra, and a very small undeveloped structure called Lulu, and both are on the median line with Iran's waters. Lulu forms an extension of Iran's Esfandiar offshore field.

AGOC and KGOC have formed an operating JV called Khafji Joint Operations (KJO), which is spending $1.2 bn to upgrade and expand the capacity by 2007 in two phases. Toyo Engineering Corp. got a contract in June 2003 to repair and upgrade the oil production facilities by end-2004 to ensure another 10 years of operations. Phase-2, 2005-07, requires Toyo to prepare a plan and designs for rebuilding the al-Khafji facilities to ensure stable production levels during the next 30 years.

KJO last month awarded a $100m contract to Athens-based Consolidated Contractors International Company (CCC) for the expansion of the Khafji crude oil onshore production facilities in the Divided Zone (DZ). The two-year project management and detailed design engineering, procurement, construction and commissioning (EPCC) contract includes supply and installation of facilities to reduce water content; a new oil reclaiming system; a new crude oil loading pump; additional drainage facilities; a new switchgear house; and related electrical works. The contract also entails the replacement of the existing control system and associated works.

Bids are due to be returned to KJO for two more contracts. The larger is to expand production facilities at the onshore Hout field. Estimated to be worth $150-200m, it involves construction of two large storage tanks, a buffer tank, pumping stations and flowlines. The two storage tanks will be built alongside existing storage facilities and will be connected by a 20-inch pipeline to ship loading facilities.

Prospective bidders for the contract, for which the bid closing date was Oct. 3, include: CCC; SA Kent Company of Saudi Arabia; Parsons E&C, part of Australia's WorleyParsons, with Saudi Oger; a three-member team of SNC Lavalin with SaudConsult and Nesma & Partners Contracting Co., both of Saudi Arabia; ABB and Washington Group International, both US-based; and Engineering for the Petroleum & Process Industries (Enppi) and Petrojet, both of Egypt.

The second contract, worth $50m, involves fabrication and installation of offshore facilities. Eight companies bid by Sept. 19, but not all were expected to submit a price. The contract involves an integrated wellhead platform to be installed about 40 km offshore in a water depth of 30 metres. The project will take about 15 months to complete.

The contracts are part of a KJO programme in the Divided Zone's (DZ) onshore and offshore fields aimed at increasing that region's crude oil output by 100,000 b/d to 700,000 b/d.

It has been proposed that Dorra, to be exploited jointly for Kuwait and Saudi Arabia, with a share likely to go to Iran as part of a territorial deal, will have a major stream of natural gas and this will feed a major electric power plant.

There would also be a giant petrochemicals complex in the DZ as part of an integrated mega-project being promoted as a private venture. This project's promoter companies, now led by the Kuwait Finance House (KFH), is to submit to KJO by Oct. 12 a proposal for petrochemicals plant and a power station. This will use flared gas associated with oil production from the area. With the exception of the power plant, to be on an island, the companies involved and the configurations are the same as for an integrated petrochemicals, power and desalination complex planned in Bahrain. The proposed DZ plant will produce about 315,000 t/y of ethylene dichloride (EDC), 167,000 t/y of caustic soda, and 30 million gallons/d of desalinated water.

The main difference to the Bahrain project will be that the amount of power will be smaller, at about 200 MW, compared to Bahrain's 1,000 MW unit. The companies involved are Shaw Int'l of the US for the ethane cracker, Uhde of Germany for the EDC unit and caustic soda unit, Chicago Bridge & Iron (CBI) of the US for the gas separation unit and Weir Int'l of the UK for the desalination portion. Rolls-Royce of the UK will build the power island. On the Bahrain project, Siemens of Germany is said to have replaced the General Electric (GE) of the US for the power element, after the quotation submitted by GE came in well over the client's budget. KFH is understood to be looking for an engineering, procurement and construction management (EPCM) contractor for both projects.

Saudi Aramco's Diverse Operations: In March 2003 Saudi Aramco gave a five-year, A$150m ($89.1m) contract to the Australian engineering firm Worley to provide PMC and engineering services to cover all of its ongoing offshore oil and gas projects including fixed platforms and submarine pipelines. The contract has provisions to extend Worley's services for another four years, with work having begun in April.

Saudi Aramco has contracted four independent power producing projects (IPPs), being built on BOT basis for a 1,000 MW capacity at Ras Tanura, Ju'aymah, Uthmaniyah and Shedgum (see background in Vol. 61, Gas Market Trends No. 14).

These are among 94 Saudi Aramco projects, worth $4 bn, tendered from early 2002 to end-2003 for execution in the upstream and downstream branches of the petroleum sector. Saudi Aramco is also having an ethylene cracker built at its Rabigh oil refining centre on the Red Sea coast (see DT No. 14 & 15).

Some of Saudi Aramco's non-core operations are to be privatised. Among other ventures, Saudi Aramco is to help found a private holding company to produce equipment and machinery as well as provide services needed in the petroleum industry. The holding company is expected to have several units with each to produce a range of equipment or machinery, or provide a range of services for Saudi Aramco.

Such companies need not concentrate only on the Saudi market. They can produce for the other GCC markets as well as for the petroleum sector in Iran, Iraq, Central Asia, etc.

A syndication of a $2,000m loan for Saudi Aramco in August 2002 was over-subscribed. JP Morgan acted a global bookrunner and Riyad Bank was the GCC co-ordinator.