RIYADH, (Reuters) – Top oil exporter Saudi Aramco has saved at least 20 percent on the costs of developing the Karan gas field after asking companies competing for the contract to resubmit bids, a local newspaper reported on Tuesday.
The cost of the project has fallen by at least $1 billion from previous estimates that pegged it as high as $5 billion, Saudi daily al-Watan reported without citing a source. Aramco asked companies to resubmit bids to reflect the fall in the prices for steel and raw materials since last summer.
The start up of output could be delayed to 2012 from 2011, the newspaper added. Aramco has yet to name a winner for the project, Watan reported.
Aramco was unable to offer any immediate comment on Tuesday.
Karan will produce 1.5 billion cubic feet per day and is key to meeting a growing gas shortage in the kingdom. Gas from the field will be processed with gas from the Moneefa oilfield.
Aramco was also reviewing contracts for the Moneefa development as part of a wider drive to reduce contract costs.
Aramco and French major Total aim to save at least $1.2 billion on the cost of their new joint refinery at Jubail in Saudi Arabia. Cost estimates for that plant reached as high as $12 billion during the commodities boom.