Aramco, Dow eye $4bn savings on petchem venture

BIG DEAL: The estimated cost of the plant was at least $20bn before reduction. (Getty Images)

Saudi Aramco and Dow Chemical expect to save around $4bn on their joint petrochemical complex as slowing economic activity cuts project costs, the Al Hayat newspaper reported on Wednesday.

The estimated cost of the plant was at least $20bn before reduction, Al Hayat said. The fall was due the global economic situation, the newspaper reported sources as saying.

The project at the Saudi energy hub of Ras Tanura is two years behind the initial schedule.

An Aramco spokesman could not be contacted immediately for comment.

Dow and Aramco are expected to make an investment decision on it next year in the third quarter of 2010, a Saudi state oil company official said in June.

If it goes ahead, Dow's investment would be the largest ever single foreign investment in the Saudi energy sector.

Oil majors have pressed oil and gas services groups to cut prices as the economic downturn has pushed steel and labour costs lower and contractors compete for fewer projects.

This was the case for Aramco's joint-venture refinery project with Total delayed their investment decision until contractors trimeed total costs to $9.6bn from a previous top estimate of $12bn.

Contractors are still feeling the pressure from oil companies to lower costs, even as oil prices rebound, the chief executive of France-based oil services contractor Technip told Reuters in an interview on Monday. (Reuters)

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