Aramco Said to Give Drake & Scull Initial Approval for Contract

Saudi Aramco, the world’s largest state-owned oil company, agreed in principle to award Drake & Scull International a contract for commercial buildings at King Abdullah Petroleum Studies and Research Center, two people with knowledge of the deal said.

Kapsarc includes energy and environment research centers, conference and education centers, a library and a housing complex. The project, located in the Saudi Arabian capital Riyadh, is designed by award-winning architect Zaha Hadid. The two people declined to be identified because the contract has yet to be signed.

“We are bidding for the project, but no contract has been signed,” Zaina Tabari, chief corporate affairs officer of the Dubai-based construction-engineering contractor, said yesterday when asked about the deal. “We are in the final stages of negotiations.”

Construction companies in Dubai are searching for work outside the emirate after the global credit crisis caused the cancellation of half the planned projects. Property prices slumped by almost 60 percent since their peak in mid-2008, Ahmed Badr, an analyst at Credit Suisse Group AG estimates.

Drake & Scull in October submitted a bid to build commercial buildings at the project, MEED magazine reported in November. Turkey’s Baytur Construction & Contracting Co., El- Seif Engineering & Contracting and Saudi Oger were also bidders on the project, MEED said.

South Korea Contract

Saudi Aramco in May awarded South Korea’s SK Engineering & Construction Co. a $506 million contract to build the residential buildings at Kapsarc, MEED said.

Drake & Scull on Nov. 9 said it will announce an acquisition in Saudi Arabia, one day after the company said it bought a 65 percent stake in Saudi Arabian mechanical, electrical and plumbing company Drake & Scull International Saudi WLL for 243 million riyals ($64.8 million).

The company formed a partnership with Al Zamil Group to establish a foothold in Saudi Arabia, where the government is spending about $400 billion on infrastructure projects in the next five years.

Drake & Scull said Dec. 21 it had an order backlog valued at 5.5 billion dirhams at the end of September.

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.

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