Mar 21 - 27, 2005



State-owned Saudi Aramco has signed number of contracts with international engineering and construction firms to develop its Khursaniyah oil and gas project and Hawiyah NGL program.

Khursaniyah project will add 500,000 barrels of crude oil per day to Saudi Arabia's production capacity by the end of 2007. The Hawiyah NGL recovery program will produce an additional 310,000 barrels of ethane and NGL products by 2008, through the Hawiyah plant and an expansion of the Juaymah gas fractionation plant near Ras Tanura.

Italy's Snamprogetti was selected for execution of the Khursaniyah producing facilities, including building a central gas-oil separation plant and wet crude handling facilities, gas gathering compression facilities and a cogeneration plant.

A consortium of Bechtel Overseas of London and Technip was selected to construct two trains of gas conditioning and ethane and NGL recovery at the Khursaniyah gas plant with a total capacity of 1 billion standard cubic feet per day.

Saudi Aramco has awarded five contracts to Japan's JGC Corp. to build the world's largest NGL processing plant and related facilities at Hawiyah. The project will help recover ethane and NGL approximately 4 billion standard cubic feet per day of sales gas. Whereas Snamprogetti will carry out the work related to gas treating and compression facilities.

Saudi Aramco President and Chief Executive Officer Abdullah S. Jum'ah congratulated the winning firms and the project teams, and emphasized that these contracts will help Saudi Aramco deliver its promise to continue securing energy for the nation and for the world. "The oil facilities will reinforce the company's international role in responding reliably to future oil market demand, while the gas program demonstrates Saudi Aramco's commitment to continue playing its part in the Kingdom's efforts to further grow and diversify the economy," Jum'ah said.

Furthermore, contracts for communication, plant infrastructure facilities and temporary camp and catering services were signed with local contractors: General Telecom & Engineering (GTE), Modern Arab Construction (MAC) and National Engineering Services and Marketing Agency (NESMA).

Under a separate contract, Spain's Tecnicas Reunidas will expand the Ju'aymah Gas Fractionation Plant as part of the Hawiyah NGL Recovery Program. The contract calls for construction of a fourth train to fractionate 270,000 b/d of ethane and NGL and 100,000 b/d of propane and NGL.




OPEC's key advisory committee last week recommended that the organization may raise its production ceiling by 500,000 barrels per day if prices stay high through April.

"The recommendation... is that OPEC will continue to monitor the markets and to continue to monitor the price developments through April. If prices remains at current levels we may increase the ceiling by 500,000 (bpd) with effect from May 1," the official said.

Nigeria's presidential adviser for oil, Edmund Daukoru had said OPEC's Ministerial Monitoring Subcommittee had recommended an increase, but would leave it up to the organization's members, meeting shortly, when to decide on or when it should take effect.

Saudi Arabia, OPEC's top producer, has been pushing the organization to raise its ceiling from 27 million to 27.5 million bpd, citing projections of increased crude demand in the second half of 2005.

The committee comprises representatives from Nigeria, Iran and Kuwait. Its recommendations are frequently followed by OPEC member states.

"The price risks are more to the upside than the downside," said analyst Yasser Elguindi of Medley Global Advisors." "There is lot more demand for the second half of the year than OPEC realized at the start of the year. They need to catch up to that reality."

With group output already close to a 25-year high, traders are concerned about OPEC's ability to meet rapid demand growth, led by China, in the second half of the year. "OPEC has done all it can do. This is out of the control of OPEC," said Qatar Oil Minister Abdullah Al-Attiyah. "There is not much we can do, we can make a good will gesture," said Algerian Oil Minister Chakib Khelil.

OPEC experts now are projecting growth of 1.9 million barrels a day on the 84-million-bpd world market, following last year's burst of 2.6 million bpd. Worried that energy costs could derail economic growth, US Energy Secretary Sam Bodman contacted a number of OPEC nations on policy ahead of the meeting, ministers said.

Some in OPEC see no economic damage from even higher prices, pointing out that the peaks of the 1970s, allowing for inflation, were equivalent to $80 a barrel in today's money. "Even at $60 we see no economic impact," said Libyan Energy Minister Fathi Omar ibn Shatwan.