Saudi Aramco Delays Ras Tanura Refinery Expansion

Published: 14-Apr-2009

By: Staff Writer Staff Writer Staff Writer

Saudi Arabian Oil Company (Saudi Aramco) has held up its plans to increase the capacity by 400,000 barrels per day at its Ras Tanura refinery, Reuters reported. The $8-billion project is to enhance domestic refinery capacity by up to 1.7 million barrels per day (bpd) from 2.096 million bpd. The company has already postponed two of those projects as it looks to bring down the costs.

Aramco has sent out an official letter to potential bidders saying the project was deferred, an industry source said.

A source from another company which has plans to bid for construction contracts for the Ras Tanura expansion project said it had also got notification of the holdup.

The refinery's expansion is to facilitate meet both increasing domestic demand and to supply feedstock to a petrochemical joint venture between The Dow Chemical Company and Saudi Aramco to be constructed close by.

That plant is anticipated to cost above $20 billion.

A third source reported that the petrochemical project had also been postponed. Completion of preliminary design and engineering for the petrochemical plant would take until the first or second quarter of 2010, from the original target by the end 2009

Saudi Aramco gave no explanation for the stoppage to the Ras Tanura refinery expansion in the letter to potential bidders, or a new timeline. In 2008, the company said the refinery would begin production by the end of 2012.

It has delayed two other 400,000 bpd refinery projects at Jubail and Yanbu as it wants contractors to modify prices to reproduce the slump in the cost of raw materials since the worldwide economic slowdown took hold.

Potential bidders had anticipated to obtain invitations to bid for the Ras Tanura construction packages in May 2009.

The development would be broken down into five packages. They would be for crude units and a vacuum distillation unit, a diesel hydrotreater, a constant catalyst regenerator, a sulphur recovery unit and for utilities and tanks.

The project would take refining capacity at Ras Tanura to 950,000 bpd. The accessible plant has capacity of 550,000 bpd and is previously the largest refining complex in the Middle East.

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