Saudi Aramco signs contracts to build $13.3bn Fadhili gas project

State oil giant Saudi Aramco signed four engineering contracts to build its Fadhili gas processing project, the company said on Wednesday.

The total project is worth more than SAR 50bn ($13.33bn) and, when completed in 2019, will be the first programme in the kingdom to treat gas from both onshore and offshore fields.

The company signed a contract with Saudi Electricity Co and France’s Engie to construct the Fadhili plant, which will produce both power and steam. A contract for work on offshore facilities went to India’s Larsen & Toubro.

Two other contracts, awarded to local companies, are for downstream facilities and a residential camp. Other contracts for the project were signed late last year.

“I think Fadhili underscores Saudi Aramco’s resolute focus on long-term strategies, despite the weak market conditions,” said Aramco’s chief executive Amin Nasser.

The Fadhili project aims to boost Saudi gas production capacity to more than 17 billion standard cubic feet per day by 2020, a top energy priority in Saudi Arabia outlined in the kingdom’s National Transformation Plan.

Many industrial firms have complained about a gas shortage crimping expansion plans. The kingdom is also trying to use more gas for power generation and water desalination instead of burning crude oil, which it wants to export.

“Using low btu (British thermal unit) gas, where technically viable, as a substitute for conventional sales will extend the availability of gas supplies within the kingdom during periods of peak gas demand,” Sadad al-Husseini, a former senior executive at Aramco, said of the project.

The plan for Fadhili includes a 1,500-megawatt power plant, which will use 400 MW of electricity to power the gas project and send the remaining 1,100 MW to the domestic grid.

Engie has signed an agreement which will ensure the power produced by the plant will be bought for 20 years.