Aramco renegotiates refinery construction contracts

COST REDUCTIONS: Aramco looking to renegotiate refinery build on back of sliding price of raw materials. (Getty Images)

Saudi Aramco is renegotiating the cost of six out of 13 contracts related to the construction of its export-oriented joint-venture refinery with Total, Saudi-based contractors have said.

The state-oil firm has invited up to seven best bidders to London to renegotiate the cost of some packages for the construction of the 400,000 barrel per day (bpd) refinery, contractors familiar with the transaction revealed.

The three-day meeting started last Wednesday, they added.

The contractors were speaking on condition of anonymity because they are barred from speaking to the media about the plan.

 “Aramco is saying let’s negotiate, let’s not rush,” said one contractor.

Saudi Aramco has already sent bidders back to the drawing table on several mega-projects to expand energy capacity as it looks to take advantage of the slide in prices for raw materials and to drive down costs.

The packages that are being renegotiated on the joint-venture refinery project with Total are related to distillation and hydro-treating, conversion, sulphur, aromatics, coker unit and plant utilities, the contractors said.

Aramco declined to comment.

It was not immediately clear if the renegotiation of the packages would have an impact on the initial schedule for the start-up of the refinery which is to be based in the industrial hub of Jubail.

Samir Al-Tubayyeb, chairman of the Saudi Aramco Total Refining Co (Satorp) joint-venture told Reuters in April that the refinery will come online by early 2013.

“Aramco has been holding meetings and discussing packages with bidders for some time,” another contractor said.

Aramco and Total have already extended the bidding round for the refinery project by several months.

The refinery will process Arabian heavy crude.

The original estimated cost of the refinery was pegged as high as $12 billion when commodity prices were near their peak last year.

But now Aramco wants to keep the cost under $10bn, he said in April. (Reuters)

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