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Thu 22 Apr 2010 03:22 AM

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Aramco looks to replace Conoco at Yanbu

At least one Chinese firm amongst companies shortlisted as potential partners.

Aramco looks to replace Conoco at Yanbu
REPLACEMENT PARTNER: Saudi Aramco has already approached firms to replace ConocoPhillips as partners for the Yanbu refinery project, according to industry sources. (Getty Images)

State oil giant Saudi Aramco has already approached firms that could replace ConocoPhillips as partners at the Yanbu refinery project, industry sources in the kingdom said on Wednesday.

At least one Chinese firm was among the companies the world's top oil exporter has approached for a role in building the refinery, one source said.

Sino Saudi trade ties have grown as Chinese economic growth has boosted its fuel consumption and increased its reliance on the kingdom's crude.

Aramco has already partnered with China's Sinopec, Asia's largest refiner, at the joint venture Fujian plant in southeast China.

A source said: "They are talking to other companies to take them as partners. This was not a surprise to Aramco. They had an indication that Conoco may pull out."

It was unclear whether the Chinese or any other firms were interested, but industry sources said Aramco was likely to go it alone on Yanbu even if it failed to find a new partner.

An industry source, who works for a company competing for construction contracts on the project, said: "Aramco told us they are committed. They will continue the work."

Aramco was pleased with the savings made on the project after it and Conoco delayed tendering for construction contracts following the financial crisis and ensuing economic contraction.

As global demand for fuel fell, so did investor appetite for new energy projects, leading to a fall in costs for building new facilities. Aramco has seen the bill reduced by billions of dollars at the megaprojects it is planning to boost energy capacity.

Another industry source said: "Aramco is happy with the prices. I think they will go by themselves."

Even if Aramco goes ahead with the project, contract award was likely to be delayed as the company decides how to proceed, sources said.

Conoco announced it had pulled out of the project to build the 400,000 bpd refinery on Wednesday.

Even though Conoco had yet to take a final investment decision on the project, the joint venture partners had pencilled in contractors to build several of the refineries most important units. (Reuters)

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safiyaddin mohammad 9 years ago

After a series of delays in the Yanbu project, Now one of the largest oil company Conoco, which is a equally involved in the mega Yanbu refinery project announced that it is withdrawing its partnership. Previously in sept 2007 Conoco cancelled its partnership in another project with IPIC for New Fujairah Refinery due rising cost in the project. Now it seems that Saudi Aramco will make Chinese firm as partner for Yanbu Project, Sino Saudi trade ties have grown as Chinese economic growth has boosted its fuel consumption and increased its reliance on the kingdom's crude. There are also chances that they(Saudi Aramco) may go on the project themselves.