Saudi Aramco To Reduce Jubail Refinery Cost To Less Than $10 Billion

Published: 20-Apr-2009

By: Staff Writer Staff Writer Staff Writer

Saudi Arabian Oil Company (Saudi Aramco) is looking to decrease the expenditure of its joint venture refinery project at Jubail on the Persian Gulf with Total S.A. (Total) to less than $10 billion amid declining commodity and equipment prices, as reported to media by the company official. Saudi Aramco and Total will get bids from contractors for the project's five contracts by the end of April 2009, with cost likely to be well below the level estimated in 2008.

If it's not below $10 billion it would raise scrutiny of the project, Samir Al Tuayyeb, chairman of Saudi Aramco Total Refining Co. said.

In June 2008, Saudi Aramco and Total have agreed to construct their project in Jubail, on Saudi's east coast, actually estimated to cost a minimum of $12 billion.

Asked whether the project would be shelved if bids aren't lower than $10 billion, Al Tuayyeb, who is also Saudi Aramco director for employee relations and training said: if the price is not right then we'll have to reconsider.

Both the companies extended the bidding period for the 400,000-barrel a day export refinery twice to consider the plunge in commodity prices and construction cost.

We started bidding while at the peak of the cycle, Al Tuayyeb said. The delay is because we're trying to give contractors a better chance to understand commodity markets and construction markets in the future.

The refinery is still likely to start up in 2013, he added. In total, the joint venture partners are tendering 15 project packages, two of which have already been granted to domestic firms.

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