Contractors tighten belts for Saudi refinery bids

DUBAI, April 16 (Reuters) - Contractors will have made aggressive cuts to cost estimates in bids due later this month to build a new refinery for Saudi Aramco and Total (TOTF.PA), sources at contracting companies said on Thursday.

Oil's slump to around $50 a barrel from a peak over $147 last year has forced cost cutting across the industry, and contractors that were turning down work a year ago now find themselves in a fierce competition for what is left, sources said.

"With the current economic situation, there are not many projects," one contractor planning to bid to build the refinery told Reuters. "Competition is much more severe. We need to sharpen our pencils."

Top oil exporter Aramco and French energy giant Total have said they want billions of dollars cut from the construction costs for the refinery to reflect the slump in the prices of raw materials since the global economic downturn took hold.

Total has said it wants to see the total cost for the refinery to come in below $10 billion, down from estimates as high as $12 billion when oil rallied toward its peak over $147 a barrel last year.

The two companies delayed the bidding round for the packages from November to April. Bids for some of the 12 packages on offer were due in on April 20, while the rest were due in by April 27, contractors said.

It was unclear when the contracts would be awarded.

"We hope as soon as possible," a source at another contracting company said. "It might be the only job awarded in 2009."

Aramco has sent bidders back to the drawing board for several mega projects to expand capacity in the kingdom. (Reporting by Reem Shamseddine; editing by Sue Thomas)