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Saudi Arabia Gets Two Bids for Jizan Refinery-Sources - ASHARQ AL-AWSAT English Archive
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KHOBAR, Saudi Arabia, (Reuters) – Top oil exporter Saudi Arabia has received two bids from four Saudi-owned firms to build, own and operate a new export-oriented refinery in Jizan, industry sources said.

Earlier this month, Saudi oil minister Ali al-Naimi said he expected the winning bid to be announced by the end of the year.

The tender for Jizan has been delayed several times, after initial plans to open bidding in the second quarter of 2007.

Saudi industrial group Tasnee teamed up with Saudi Nama Chemicals Group and Saudi Advanced Refineries and Petrochemicals Co (ARPC) to form a consortium, two sources said.

Corral Petroleum Holdings AB, Swedish-registered and owned by Saudi billionaire Mohammed al-Amoudi, also bid for the project, the sources said adding that they were not aware of any further bidders.

The Saudi oil ministry’s point person for Jizan could not be reached for comment. Corral Petroleum Holdings could not be reached.

Corral Petroleum fully owns Sweden-based Preem AB, which has two oil refineries in Sweden. Corral is also the largest shareholder in Morocco’s only oil refinery Samir.

The Jizan refinery, which would have a capacity of 250,000 to 400,000 barrels per day of crude is the first Saudi oil refinery to be 100 percent privately-owned.

Jizan is far from the Saudi oil fields on the Gulf coast. It is part of a wider plan to develop the impoverished southern region near the border with Yemen, where a shi’ite rebellion against the government in Sanaa has spilled over into Saudi Arabia.


When the Oil Ministry issued request for proposals, it invited foreign companies to form consortia with local firms.

Saudi Oil Minister Ali al-Naimi said last year the ministry pre-qualified eight local firms and six international companies for the bidding round. He did not provide details.

In 2007, the ministry said 43 foreign firms and eight Saudi companies had been prequalified for the tender.

Saudi oil giant Aramco was listed as one of the prequalified companies.

Spokesmen for France Total, Britain’s BP, Italian ERG, U.S. Chevron Corp, Marathon Oil Corp, ExxonMobil, Lukoil, Royal Ducth Shell have all declined to comment.

Valero Energy Corp declined to comment but said they are “not currently in the market for refining assets” while U.S. Occidental Petroleum said “Oxy today is exclusively upstream and has no downstream operations or assets anywhere in the world.”

Eni, Abu Dhabi National Oil Co (ADNOC), Saudi Acwa Power Development and Saudi Obeikan Investment Group did not bid for the project, sources familiar with the companies said.

“We are not interested in participating in this tender,” a Statoil spokeswoman said.

Neither Petrom SNPP.BX nor Petronas, whose chief executive Hassan Marican had said his company was keen on taking a role in the refinery were immediately available for comment.

“International companies showed interest in the early stage, they needed some kind of incentives from the government… Incentives (offered) were not favorable for intenational companies to make any investment… that is why they gave up pursuing the project,” one source from an international engineering and construction company close to an oil firm said.

Naimi said last year companies participating in the project would benefit from tax breaks of up to 50 percent.

In May, the governor of Jizan, Prince Muhammad bin Nasser bin Abduaziz was quoted as saying in a local newspaper that companies would be offered financial facilities of up to $4 billion.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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