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Sinopec Subsidiary Signs $1.3-Billion Deal with Saudi Aramco for Gas Pipeline Construction: Project Details and Future Plans

Sinopec Subsidiary Signs $1.3-Billion Deal with Saudi Aramco for Gas Pipeline Construction: Project Details and Future Plans

Sinopec Subsidiary Inks $1.3-Billion Deal with Saudi Aramco for Gas Pipeline Construction

A subsidiary of Sinopec, China's energy behemoth, has entered into a $1.3-billion agreement with Saudi Aramco. The deal involves the procurement and construction of pipelines for expanding the Kingdom’s natural gas distribution network, as announced by the Chinese company.

Details of the Contract

The turn-key fixed-price contract, valued at $1.3 billion (5.17 billion Saudi riyals), has been awarded to Sinopec International Petroleum Services Corporation. This company is a wholly-owned subsidiary of Sinopec Oilfield Service Corporation. The contract assigns them the responsibility for the procurement and construction of Packages 6 and 7 of the Phase 3 Pipeline Project Clusters of the Master Gas System within the country. The mechanical completion of the project is anticipated by May 31, 2027, as per the contract, according to a statement by Sinopec to the Hong Kong Stock Exchange.

About the Project

The project, Phase 3 Pipeline Project Clusters of Saudi Aramco MGS, represents the third phase of the development of Aramco’s commodity natural gas pipeline project, as stated by Sinopec. In recent years, the Saudi oil giant has voiced its plans to augment its natural gas production and sales within the Kingdom. The aim is to deliver gas to a larger customer base and substitute a portion of the crude currently used for power generation in Saudi Arabia.

Future Plans for Saudi Aramco

After abandoning oil capacity expansion plans earlier this year, Aramco, the Saudi state oil giant, is now set to increase natural gas output by 60% by 2030, as per statements from executives earlier this year. In the third quarter of the previous year, Saudi Arabia announced two significant natural gas discoveries in two fields in the Empty Quarter. Additionally, five reservoirs were discovered in previously found fields.

Increasing Demand for Gas

The demand for gas is projected to rise significantly in the wake of a global energy transition. This has spurred Saudi Arabia to expedite the development of unconventional natural gas fields. It is estimated that global LNG demand will grow by 50% by 2030. Aramco has also made its entry into the international LNG market and is reportedly in talks with U.S. LNG developers to acquire a stake in a planned project and sign a long-term LNG offtake agreement from another proposed export facility.

Closing Thoughts

This deal between Sinopec and Saudi Aramco highlights the increasing global demand for natural gas and the strategic moves companies are making to capitalize on this trend. It also underscores the shift in energy consumption patterns and the growing significance of natural gas in the global energy mix. What are your thoughts on this development? Feel free to share this article with your friends and engage in a discussion. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.

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Some articles will contain credit or partial credit to other authors even if we do not repost the article and are only inspired by the original content.

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