Japan's JGC Wins Saudi Aramco's Shale Gas Contract

Japan's JGC Corp (VJC.BE) has won a contract to build shale gas facilities in the northwest of the country for state oil company Saudi Aramco , industry sources familiar with the matter said.

The project, known as System A, will involve building processing facilities, wellheads and pipelines for gas in Turaif, where a big mining project called Waad al-Shamal is under development.

The sources could not give an exact value for the contract estimated to be as much as $200 million, one source said.

A JGC spokesman in Japan confirmed that its subsidiary had made a bid for the project but the company has received no official notification of the result.

Saudi Aramco declined to comment on the report.

The award of the contract was originally due to happen by end November 2014 with a targeted completion in December 2016 before the bidding process was extended several times.

Capacity of the gas gathering facility increased to 66 million scfd (standard cubic feet per day) from 50 million scfd when Aramco originally tendered the project.

Four companies are bidding for another unconventional gas project, an expansion of the System A and known as System B. The project is four times as big as System A.

The mining project and a power plant for Saudi mining company Ma'aden is projected to take 200 million cubic feet per day of unconventional gas by 2018 from the projects.

The search for natural gas remains a priority for Saudi Arabia as it struggles to keep pace with rapidly rising domestic demand for power and its strategically important petrochemicals industry.

It has been inspired by the shale gas surge in the United States, which has been transformed from the world's largest gas importer to an exporter.

The kingdom has made appraisals of unconventional gas potential in its northwest, Eastern Province and Empty Quarter.

Saudi oil officials gave a new estimate of how much shale gas will be produced in Saudi Arabia. It will pump 20 to 50 million cubic feet per day in 2016, ramping to 500 million cubic feet per day by 2018 with an end target of 4 billion cubic feet per day by 2025.

(Reporting by Reem Shamseddine; additional reporting by Yuka Obayashi)