Sunday, Jun 21, 2009
(This story was originally published Thursday.)
By Oliver Klaus and Tahani Karrar
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Technip SpA (TEC.FR), Tecnicas Reunidas S.A. (TRE.MC) and South Korean companies among others won contracts worth $9.6 billion to build a refinery on Saudi Arabia's Persian Gulf coast, a joint venture of Saudi Arabian Oil Co. and Total S.A. (TOT) said Thursday.
The 13 contracts awarded mark "an important step in the execution of this 400,000 barrel per day world-class, full-conversion refinery in Jubail, which plans to be fully operational by the second half of 2013," Saudi Aramco Total Refining and Petrochemical Co., or Satorp, the Aramco/Total joint venture, said in an emailed statement.
The decision to move ahead with the refinery shows Total and Aramco's "determination to bring off such a far-reaching project, even in a weaker economic environment," Total's chief executive, Christophe de Margerie, said.
"As a result, we will be able to meet, from 2013, the increasing demand for high-quality refined products from Asia and the Middle East," de Margerie added.
Investments in Middle East refineries have increased in the past five years amid rising demand for refined products that meet increasingly tight environmental specifications, both in the region and internationally.
Aramco in 2006 signed a joint venture agreement with ConocoPhillips (COP) to build a similar 400,000-barrel-a-day export refinery at Yanbu on the country's Red Sea coast.
Once completed, the Jubail export refinery -- to be one of the world's most advanced -- will process Arabian Heavy crude into products that will meet tight specifications for environmentally-friendly fuels, Satorp said. Some the plant's output will be consumed in the kingdom.
FALLING PRICES
Satorp's board in late 2008 decided to push back the bid deadline for the project packages to give companies time to revise their offers amid falling raw material and equipment prices in a bid to reduce the plant's overall cost to below $10 billion.
"The target has been achieved, whereby the overall project cost now stands at $9.6 billion," Satorp said.
Tecnicas Reunidas and Technip won the contracts to build distillation and hydrotreating conversion units respectively at the Jubail refinery, Satorp said without specifying the value of the deals. Technip was also awarded a separate deal for interconnecting utilities.
Daelim Industrial Co. (000210.SE) won the project's sulfur and amine package, while Samsung Engineering Co. (028050.SE) secured the contract for the aromatics facilities, Satorp said.
Contracts were also awarded to SK Engineering & Construction, a team of Chiyoda Corp. (6366.TO) and Samsung, and Sumitomo Corp. (8052.TO). Other packages went to Petro Steel, Dayim Punj Lloyd Construction Contracting Co. Ltd., Mohammed Rashid Khathlan Est. for Contracting, Al Osais Contracting Co. and Gulf Consolidated Contractors Co. Ltd.
In total, the joint venture partners awarded 15 project packages, two of which had already been handed to local firms.
Construction of the plant is expected to create as many as 1,200 jobs in the kingdom, according to Satorp.
The refinery will maximize production of diesel and jet fuel, and will also produce 700,000 tons a year of paraxylene, 140,000 tons a year of benzene and 200,000 tons a year of polymer-grade propylene, Satorp added.
Aramco and Total also said they plan to sell off a 25%-stake in Satorp in the fourth quarter of 2010 in an initial public offering in the kingdom, leaving each company with a 37.5% stake.
-By Oliver Klaus and Tahani Karrar, Dow Jones Newswires, +9714 364 4962 Oliver.Klaus@dowjones.com
Copyright (c) 2009 Dow Jones & Co.
(END) Dow Jones Newswires
21-06-09 0414GMT
