Saudi Aramco signs cogeneration deal with International Power, Saudi
Oger
Posted: 21 December 2003
Saudi Aramco signed a series of four energy conversion agreements
on Saturday with a private-sector consortium comprising International
Power of the United Kingdom and Saudi Oger, to implement four cogeneration
projects to supply electricity and steam to Saudi Aramco.
The projects will produce over 1,000 megawatts of electricity and
more than 4 million pounds of steam per hour.
The projects will be implemented under the “BOOT” (Build-Operate-Own-Transfer)
business model, whereby the investors will build, own and operate
the cogeneration facilities and transfer them to Saudi Aramco 20
years after commencement of commercial operations. Saudi Aramco
will construct the facilities required to connect the new projects,
whose total value will exceed SR 2 billion, to its existing facilities.
The deal was signed for International Power by chief executive
officer Philip Cox; for Saudi Oger by senior vice president Emad
Baban; and for Saudi Aramco by vice president of Project Management
Isam A. Al-Bayat. Abdallah S. Jum‘ah, Saudi Aramco’s
president and CEO, also participated in the signing ceremony, held
at the Saudi Aramco Exhibit in Dhahran.
Jum‘ah underscored the program’s pioneering investment
approach and the state-of-the-art technology that will utilized
in the cogeneration plants. He said the program was aimed at providing
a reliable, cost-effective source of electricity and steam for key
Saudi Aramco oil and gas processing facilities and encouraging investment
by the private sector in the Kingdom and internationally.
Jum‘ah stressed that the program is consistent with Saudi
Aramco’s objectives of boosting operating efficiency, reducing
costs and protecting the environment.
Execution of the agreements, he said, represents an important step
in Saudi Aramco’s ongoing efforts to support the national
economy. It also grants a greater role in oil and gas operations
to the private sector and introduces new ideas and innovative investment
opportunities to leverage the Kingdom’s hydrocarbon resources,
Jum‘ah said.
He expressed satisfaction at the interest shown by investors in
this program, which signals a high level of confidence in Saudi
Aramco and the Kingdom.
Philip Cox said the agreement represents International Power’s
first entry into the Saudi market. He was pleased that International
Power was making a substantial investment in the Kingdom at a time
when Saudi Arabia was gearing up to invite investors in independent
water and power projects.
Emad Baban of Saudi Oger highlighted the significance of the accord
not only to Saudi Aramco but also to the Kingdom, in terms of its
value in encouraging private investment, both local and foreign,
particularly since it is the first power generation project of its
size to be implemented by the private sector in Saudi Arabia.
Under the agreement, Tihama Company, a joint venture of the International
Power-Saudi Oger consortium, will build, finance and operate cogeneration
facilities at four key Saudi Aramco operating sites in the Eastern
Province: ‘Uthmaniyah, Shedgum, and Ju‘aymah Gas Plants
and Ras Tanura Refinery. Ownership of the facilities will be conveyed
to Saudi Aramco after 20 years.
Implementation is expected to begin in the first half of 2004 and
to be completed in phases during 2006. Saudi Aramco will supply
the cogeneration facilities with gas and water required for power
and steam generation.
Local contractors are expected to participate in a major way in
the construction activity, estimated at hundreds of millions of
Saudi riyals. Furthermore, the total operation, maintenance and
support services costs in which local contractors, vendors and suppliers
are expected to participate, are estimated at about SR 100 million
per year.
For more information see http://www.saudiaramco.com
Posted by Richard Price,
Editor Pipeline Magazine
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