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Home / Business / Aramco's repairs can take months longer than the company expects, contractors say

Aramco's repairs can take months longer than the company expects, contractors say



Saudi Arabian Oil Co. is in emergency talks with equipment manufacturers and service providers, and offers to pay premium rates for parts and repair work as it attempts a quick recovery from missile attacks on the largest oil processing plants, Saudi officials and told oil contractors.

It can take many months – rather than the maximum ten weeks company executives have promised – to restore operations to full operation, they said.

After a devastating attack on the largest oil processing plant than a week ago, Aramco is asking contractors to quote the price for updates and restorations. In recent days, company executives have bombarded entrepreneurs, including

General Electric

with telephone calls, faxes and e-mails seeking relief, according to Saudi officials and oil service providers in the kingdom.

A Saudi official said the cost could run into the hundreds of millions of dollars.

Saudi Arabia and the World The most profitable company struggles to recover from the attacks, which came within weeks of the Saudi government reviving plans for its ongoing, off-the-first initial offer for Aramco shares. Now, the IPO, the company's financial health and the country's economy may be at risk, Saudi officials and advisers say.

Saudi officials and executives in Aramco have been consistent since the attacks, conveying statements intended to reassure oil markets that state-owned companies will recover quickly while continuing to supply customers as usual.

Saturday Aramco CEO

Amin Nasser

Repeated production would be back to its precision level by the end of the month. "Not a single shipment to our international customers has been missed or canceled as a result of the attacks," he said. The company intends to return to its maximum production capacity by the end of November.

Aramco has already begun shipping equipment from the US and Europe to rebuild damaged plants, says

Fahad al-Abdulkareem,

general manager of southern operations at Aramco.

Saudi officials say there is little sense of calm at the highest levels of the company and the Saudi government. It may take up to a year for some contractors to manufacture, supply and install specific parts and equipment, said Saudi officials and the oil contractor.

"We are still in a hectic hunt for spare parts," a Sa Saudi Arabian. "It's not really as nice and rosy as you might think."

It has been a little over a week since Khurais oilfield and Abqaiq, the world's largest oil processing plant, were hit by missiles, leading to the largest single-burst oil industry ever seen. The attack hit 5.7 million barrels per day of Saudi crude oil production ̵

1; about half of the country's production and nearly 6% of global supply.

The Trump administration and Saudi Arabia have blamed the attack on Iran, which has said it was not responsible.

Workers are seen at the damaged site of Saudi Aramco oil plant in Abqaiq on Friday.


Photo:

Hamad l Mohammed / Reuters

Across the two locations in Abqaiq and Khurais, nine oil treatment units, known as stabilizers, were variously damaged, Aramco said. Eleven spherical structures that take gases out of the crude oil were hit at Abqaiq, and there were two more tanks that keep water removed from the crude oil, the company said.

The extent of the damage means a return to normal operations at Abqaiq can take up to eight months, some Saudi officials said. Most technical experts who have seen the devastation first, say they share that view.

"Repairing the damaged units will take time, anywhere from two to nine months, depending on the damage, even if Aramco had cases in place and spare parts tailor-made equipment," said IHS Markit in a note.

The Saudis stretched to

Saipem

SPA late last week and told the Italian contractor that the kingdom would pay generously for repairs, said Saudi officials and a contractor with operations in the kingdom. Saipem is considering how it could help Aramco, but with $ 3.5 billion in contracts with Aramco signed in July, it's already exaggerated in Saudi Arabia, the contractor said.

Saipem supports [Aramco] in assessing damage caused by the attack "in the Khurais field, where it already has contracts, the company said in an email.

Contractors can supply many of the spare parts Aramco needs in a month or so, but only if they are rushed to deliver air at an additional cost of 50%, the contractor said. Customizable metered turbines and compressors can usually take up to a year from the time they were ordered to be ready to install, the contractor said.

Aramco has also sought help from General Electric and is negotiating with the company for help to replace damaged machinery, according to Saudi authorities and a contractor familiar with the negotiations.

General Electric did not respond to a request for comment.

Meanwhile, Aramco is working hard to keep the lid on the severity of its challenges. As part of a media tour on Friday, the company showed reporters and TV crews a fully blackened stabilizer and another under repair that was in somewhat better condition. Hundreds of hard-hat workers were in the Khurais area, while cranes appeared to swing into action.

Aramco employees say they were stunned when they saw the Saudi energy minister announce the company's victorious improvement on international television last week.

"I have been honored by the king and the crown prince," he said, "for delivering the good news to the inhabitants of this country and its followers that oil supplies to the market have returned to what they used to be."

In the meantime, many Aramco executives and board members express private doubts that the company can achieve the goal of a three-week return. They estimate that recovery will take twice as much, according to people who are in contact with them.

Some "board members are appalled" that the company could communicate such optimistic assessments, one of the people said.

From the moment fires from Abqaiq and Khurais began to light up the Saudi sky last week, the company has been slow to grasp the extent of the attack and the extent of the damage, Saudi officials said.

"We knew that looking at screens was something very serious, but we just didn't know what it was," said an Aramco official.

While the strikes were underway, entire sections of a screen showing Aramco's facilities over Saudi Arabia became dark. Control room personnel at Aramco's headquarters in Dhahran originally logged the incident as a series of routine fires.

But as firefighters tackled the blisters on the ground at the Khurais site, emergency personnel looked up and then dashed across the sky as two missiles whistled into the facility with a bang, said Aramco's Mr. al-Abdulkareem.

A total of four cruise missiles hit the Khurais plant on Saturday, each targeting the oilfield's 98-foot stabilization tower. Metal debris from the structures was still scattered on the ground Friday.

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