PARIS,(Reuters) – French oil and gas company Total will decide before the end of June whether to go ahead with a planned refinery in Saudi Arabia as it weighs the impact of rising industry costs, it said on Thursday.
State oil company Saudi Aramco has signed a joint venture with Total for a 400,000 barrels per day refinery to cope with the country’s growing crude output capacity.
“We will decide this year, before the end of the first half,” a Total spokeswoman said. “We have withdrawn from exploration in Saudi Arabia so this is a project that we are keen on,” she added.
The refinery in Jubail was initially expected to cost $6.4 billion. Total believes the cost will be higher but the spokeswoman declined to say by how much.
The Total deal is part of Aramco’s wider aim to spend, together with partners, $50 billion by end-2011 to boost refining capacities at home and abroad.
Aramco signed a similar deal with U.S. company ConocoPhillips for a refinery in Yanbu for $6 billion.
Higher labour and raw material costs have caused delays and cancellations across the world’s oil and gas industry.