Saudi to award Jizan refinery contract by Nov-end

Jizan refinery will have capacity of 250,000-400,000 bpd. (Getty Images)

Saudi Arabia aims to award the contract to build a new refinery with capacity of up to 400,000 barrels per day by the end of November, the oil ministry said in a statement on Wednesday.

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

In the latest delay, the ministry said it has put back the deadline to Sept. 2 from March 7 after feedback from companies interested in bidding.

The ministry gave no reason for the delay in the statement posted on its website on Wednesday.

On Monday, Saudi newspaper Al Watan reported the tender would be delayed due to the need to cut costs as a result of the global recession.

Turmoil in credit markets and weak oil prices have prompted energy firms around the world to reconsider expensive projects or cut back on spending to preserve liquidity.

Global refining margins have been falling on weaker demand due to a slowing economy and increased supply from new export refinery capacity.

Jizan is far from Saudi oil reserves and is part of a wider plan to develop the impoverished southern region near the border with Yemen.

The kingdom will have to build a pipeline to supply the plant, and industry observers have been sceptical over the added cost that this implies.

The world's top oil exporter has ambitious plans to overhaul and expand its refining operations at home and abroad. It envisages domestic refining capacity rising by more than 1.7 million bpd by 2015 from the current level of 2.1 million bpd.

The Jizan refinery will have a capacity of 250,000-400,000 barrels per day. It would be the first Saudi oil refinery to be 100 percent privately-owned, with an initial public offering taking place once the refinery was deemed viable.

The government unveiled plans to build the refinery in 2006. (Reuters)

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