KHOBAR - Saudi Aramco plans to award an integrated drilling contract in South Ghawar worth $500 million in a bid to cut costs, sources at oil services firms said. “They want one company to provide the rigs, directional services. The objective is to cut costs,” said one source close to the bidding process. Aramco is expected to award the contract by mid-November, they said. Baker Hughes, Sinopec, Schlumberger, Halliburton, Weatherford are bidding for the job. “It's an integrated project management from A to Z. What Aramco is trying to do is packaging and give the field to a services company to develop it,” said another source involved in the bidding process. “Today, there are Aramco rigs working there ... Aramco now wants to give the project, the block to a services company which will provide rigs, engineering,” he said. The five-year turnkey project will allow services providers to fully manage the drilling operations including rigs. Three sources said the work would involve Uthmaniyah, Haradh and Hawiyah located in Ghawar, the world's largest oilfield. JV with Total Saudi Aramco and France's Total are expected to pay more than $12 billion to build the Jubail oil refinery, a senior company executive said on Monday. The 400,000 barrels per day (bpd) refinery will be commissioned end-2012 and was expected to come online in March 2013, Daniel Lacombe, the Jubail Refinery's project director said on the sidelines of a World Refining Association conference in Abu Dhabi. “The EPC (engineering, procurement and construction) cost is $9.6 billion and on top of that there are other costs... owners' costs, in our case - cost of financing, which is about 25 percent more, that works out to around $12 billion plus,” he said. Funding for the refinery which also includes a 700,000 tons per year (tpy) petrochemical plant will come from commercial banks in Europe, the Middle East and Asia, export credit agencies, Saudi funds as well as Islamic instruments including a Sukuk issue, Lacombe said. “The Sukuk could be over $500 million and chances are high that we will issue a sukuk for which there is quite an appetite in the kingdom,” Lacombe said, adding that investors in the Sukuk could include Saudi state-owned pension funds and private investors too. The benchmark sized Sukuk, or Islamic bond, could be launched in 2010, Lacombe said. The project will be funded through a 65 percent debt and 35 percent equity ratio, while the financial close is expected to be achieved by December this year or January 2010, he said. A public offering also could be floated within two years of the project start-up, he said. “The intention for the IPO is in Riyadh and 25 percent of Saudi Aramco's stake will be for the IPO,” he said, adding that it would then bring down Aramco's stake to 37.5 percent. Currently, Saudi Aramco has a 62.5 percent stake in the project while Total has 37.5 percent.
