PARIS, (Reuters) – Total and Saudi Aramco expect a new 400,000 barrels per day refinery in Saudi Arabia to start up in 2012 and a final decision will be made in mid-2008, a senior official of the French oil company said on Tuesday.
The world’s top oil exporter Saudi Arabia is planning four new plants as it looks to boost domestic refining capacity by as much as 1.6 million barrels per day from 2.098 million bpd.
But rising costs for equipment and labour have hit the energy sector worldwide, forcing project cancellations and delays and raising industry concern about the new Saudi plants.
Total, however, is confident that the final decision will be made in summer and operation of the Jubail refinery is expected in 2012, Jean-Jacques Mosconi, the senior vice president of the company’s strategy and development, said at the European Fuels Conference organized by the World Refining Association.
“If we launch the project in 2008, the 2012 start-up will be realistic,” he told reporters on the sidelines of the conference. “The final investment decision will be made in summer, in the middle of this year.”
Mosconi’s remarks follow comments by an industry source in Saudi Arabia last month that Total and Aramco would take the final investment decision on the plant in May or June.
The estimated cost of the refinery and a similar plant Aramco is planning with U.S. firm ConocoPhillips (COP.N: Quote, Profile, Research), have risen above $10 billion from initial estimates of $6 billion, Gulf industry sources involved in plans for both projects have previously said.
Mosconi declined to disclose the cost to build Jubail.
Mosconi told the conference the Jubail refinery would process Arab Heavy and a new grade from the offshore Manifa oilfield in Saudi Arabia, which will start production in 2011.
“About 70-80 percent of Manifa will go to Jubail,” he said.
He said distillate products produced at the complex refinery would be exported to Europe mostly, while some would be shipped to Asia.