SAUDI ARABIA - The Private Saudi Petrochemical Sector.The Saudi private sector has a rapidly growing role in the petrochemicals business, taking on intermediate and specialty projects. Within a few years, the Years, The
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See : Time share of private petrochemical industries in the Saudi GDP GDP (guanosine diphosphate): see guanine. will become significant and exports from them will be a key source of income.More than 15 licences have been granted by Riyadh in recent months for the next wave of petrochemicals. Some are advancing.
The dearth of qualified engineering, procurement and construction The introduction to this article is vague. To comply with Wikipedia's guidelines, it should be improved. (EPC (1) (Entertainment PC) See HTPC.
(2) (Electronic Product Code) A standard code for RFID tags administered by EPCglobal Inc. (www.epcglobalinc.org). ) contractors and rising construction costs mean margins are not as high as expected. But with the sheer amount of work on offer. MEED on Sept. 23 quoted a European EPC contractor as saying: "Our order books are full and we are not going for any more work until next year. We are really in the ideal position where we can afford to pick and choose our projects".
The volume of work in Saudi Arabia Saudi Arabia (sä`dē ərā`bēə, sou`–, sô–), officially Kingdom of Saudi Arabia, kingdom (2005 est. pop. and elsewhere in the Gulf is pushing the contracting community's capabilities and fuelling concerns about the availability of resources. MEED said: "The fear is that by early 2006, when a host of projects enter the construction phase, delays could occur, as contractors mobilise their workforces at the same time". It quoted another European contractor as saying: "What worries me is that we are all at the same stage in the projects cycle. Visas, general bureaucracy, logistics, supplies, a lot of us are going to be fighting for the same limited resources". The problem is compounded by delays to petrochemical projects in Kuwait and Qatar.
For the handful of EPC contractors able to handle large-scale projects tendered in Saudi Arabia, the uncertainty surrounding materials and equipment, subcontractors and labour has increased the risk of completing major projects on time and at a fixed price. The risk factor contributes to higher prices for lump-sum turnkey (LSTK LSTK Lump Sum Turn Key (contract or package)
LSTK Lunds Songahm Taekwondo Klubb (Sweden)
LSTK Länsi-Suomen Teollisuus- ja Kiinteistötekniikka (Finland) ) contracts. Clients want to reduce contractor risk. A growing trend is for downstream petrochemical jobs to be awarded on a cost-reimbursable basis and then converted to LSTK. This suits both the client and the contractor as it lowers costs, margins and risk. MEED quoted the European contractor as adding: "Obviously, margins are going to be slightly lower as a result of these contracts. But there is also considerably less risk, and in this environment of volatile material and supply prices, this is no bad thing, so we are generally happy with the trend".
The fashion for cost-reimbursable EPC contracts, MEED said on Sept. 23, had not yet reached the cracker sector, which has been sticking to the LSTK format. "As the most expensive of all the main process units on a petrochemicals complex, crackers also tend to be the most draining on contractor resources". MEED quoted a member of the ethylene ethylene (ĕth`əlēn') or ethene (ĕth`ēn), H2C=CH2, a gaseous unsaturated hydrocarbon. It is the simplest alkene. club as saying: "The business favours LSTK contracts because projects which are financed require top margins". The experience and limited number of contractors capable of cracker jobs allow bidders to better evaluate risk and leave a safety net should unexpected problems occur.
Regardless of the type of contract they work on, contractors are unanimous in their view that clients need to be more flexible. Lack of spare capacity in the EPC contractor market gives their concerns greater weight than ever. MEED quoted the European contractor as saying: "We all have problems with overheating Overheating
An economy that is growing very quickly, with the risk of high inflation. prices. But it is still very difficult to convince clients - whether private or state-owned - that budgets must go up. Right now, it's a seller's market, but some clients still think they can dictate terms, producing budgets that bear no similarity to market conditions".
Project schedules are another problem, with contractors complaining of clients who demand timeframes of 32 months, while the contractor prefers up to 40 months. Contractors and subcontractors find it hard to obtain experienced engineers as they seek to expand their workforces. Like the market, the number of engineers with five to 10 years' experience goes through peaks and troughs. MEED quoted a subcontractor One who takes a portion of a contract from the principal contractor or from another subcontractor.
When an individual or a company is involved in a large-scale project, a contractor is often hired to see that the work is done. as saying: "Any problems with the market are irrelevant if we can't find the engineers to compete for work".
Consolidation Urged: Private project clients in the petrochemicals sector have faced problems as well. There are calls for smaller private producers to consolidate to compete in the global market. Such a move is backed by Abdel Wahhab al-Sa'doun, director-general for the energy sector at the Saudi Arabian General Investment Authority THIS ISN"T THE CORRECT LOGO.
SAGIA (ساقيا - الهيئة العامة للاستثمار) (SAGIA SAGIA Saudi Arabian General Investment Authority ).
While private players, often with lower overheads and operating costs operating costs npl → gastos mpl operacionales , can compete in the high-demand climate - albeit at a lower profit margin than the major producers - there is concern that when the squeeze comes, they will be the ones to lose out.