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Aramco, Conoco to seek Yanbu refinery bids soon
April 6, 2009 / 10:06 AM / in 9 years

Aramco, Conoco to seek Yanbu refinery bids soon

*To issue tender for bids around mid-year

*Bids due in by end year

*Still looking at ways to save costs

By Reem Shamseddine

DUBAI, April 6 (Reuters) - State oil giant Saudi Aramco and U.S. major ConocoPhillips (COP.N) plan to seek bids in mid-2009 to build their joint venture refinery in Saudi Arabia, sources familiar with the project said on Monday.

The two firms halted the bidding process in November due to uncertainty in financial markets and as the prices of raw materials plummeted.

Aramco has since said it wanted to cut billions of dollars from the cost of mega-projects to boost capacity. This follows the slump in prices of raw materials since the economic slowdown began.

“The plan is to issue a tender for the bids by mid-year,” one source told Reuters on condition of anonymity. “The bids should be in by the end of the year.”

Estimates for the cost of the refinery and another plant to be built by Aramco and French energy group Total (TOTF.PA) doubled from initial estimates to around $12 billion as oil rallied to its peak last year.

The word’s top oil exporter Aramco and Conoco, the second largest U.S. refiner, were still looking for ways to bring down costs, sources said.

“Aramco is holding a series of meetings with contractors and is exploring other concepts for construction or management (to lower costs),” a second source close to the project told Reuters.

Aramco said last month that it had met with contractors to discuss how it wanted costs cut to reflect the decline in prices of raw materials as the global economy slows.

The refinery has a start-up target in 2013 and will process heavy crude from the Moneefa oilfield, Saudi Arabia’s largest-ever offshore oil project.

The Yanbu plant on the Red Sea coast is one of four that the world’s top oil exporter aims to build to boost domestic refining capacity to around 3.8 million barrels a day from 2.1 million barrels a day currently.

Aramco and Total (TOTF.PA) have also extended the deadline for construction bids on their 400,000 bpd Jubail refinery to April from February. The two firms are seeking to reduce the cost of building that plant to less than $10 billion.

Editing by Simon Webb, Editing by Peter Blackburn

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