Saudi delays Moneefa project

PROJECT DELAY: Development at Saudi Arabia's Moneefa field to be delayed by 6 months, say sources. (Getty Images)

Top oil exporter Saudi Aramco has delayed the development of its Moneefa offshore oilfield project by at least six months, industry sources close to the project said.

"Aramco will proceed with the project and agreed on a six month delay," a source familiar with the project plans told Reuters.

That would push the start of the kingdom's largest-ever offshore oil project to 2012 from the initial schedule of mid-2011.

Aramco put the 900,000 barrels per day Moneefa project under review in November last year to renegotiate contracts to reflect the slide in the cost of materials and construction as the global economy slowed. The scheme had an estimated cost of $9 billion when Aramco put it on hold.

"Aramco has been asking contractors to share the savings ...there have been some amendments on the contracts, like the schedule time and revised price items, but Aramco is moving forward," another source said.

Construction of the oil processing facilities would start in January 2010, from the initial target of June 2009, a contractor said.

Saipem, the major contractor in the project, said earlier this month that it had proposed to Aramco that it shift its 1.44 billion euro contract from a lump-sum price to one that gives it a margin above costs and that the contract be delayed. "They agreed now on a reduced price which yielded savings for Aramco. It (Aramco) gave instructions to proceed," a contractor said. The cost-plus basis only applied to procurement, the contractor added.

Heavy, sour Moneefa crude would be processed at two new joint venture refineries Aramco shares with French energy giant Total and US major ConocoPhillips. Both refineries, with capacity of 400,000 bpd, were expected to come on stream in late 2012 or early 2013 after a delay of around a year each.

Aramco mothballed Moneefa in 1985 because of the heaviness of its crude and decided to develop it in 2007 when global oil demand was soaring.

The field will not boost Saudi Arabia's capacity, set to reach 12.5 million bpd in June. Moneefa would replace declining output at older fields.

Saudi Arabia's current crude output is just below 8 million bpd. (Reuters)

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