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Tue 2 Jun 2009 10:07 PM

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Dow, Conoco Saudi projects delayed

UPDATE 2: Giant Dow Chemical-Saudi Aramco petrochemical plant two years behind initial schedule.

Dow Chemical Co's and ConocoPhillips' major joint ventures in Saudi Arabia face delays, a Saudi state oil company official said on Tuesday.A giant petrochemical plant that Saudi Aramco planned to build with Dow Chemical Co would start up in 2015, Abdulaziz al-Judaimi said. That was about two years behind the initial schedule.

Engineering and design for that plant should be completed in 2010, Judaimi, vice president for new business development at Aramco, told an energy conference in Abu Dhabi.

Dow's planned investment in the plant would be the largest single investment by a foreign oil company in the Saudi energy sector. The price tag for the plant was at least $20 billion.

The final investment decision (FID) on the project is expected to be completed in the third quarter of 2010, Judaimi said.

"Once we know the capital investment needed, we will have a good understanding on the viability of the project," he said.

"And at that moment both companies will have their own internal approval on the project...we are scheduling the FID to finish by the third quarter of 2010."

Saudi Aramco and ConocoPhillips plan to start up their joint venture Saudi Yanbu refinery in late 2014, Judaimi said, a year later than previously scheduled.

The world's top oil exporter has delayed two joint venture refineries, the other with France's Total, as it looked to take advantage of falling construction prices to drive down costs.

The kingdom has also delayed plans to develop the 900,000 barrels per day Moneefa oilfield due to the drop in global oil demand arising from economic slowdown. The refineries will process oil from Moneefa, so construction is tied to the field's development.

"We plan to award engineering, procurement and construction contracts in 2010 and to start up in late 2014," Judaimi said.

The 400,000 barrels per day (bpd) Yanbu refinery on the Red Sea coast is one of four that Saudi Arabia plans to build to boost domestic refining capacity to around 3.8 million barrels per day (bpd) from 2.1 million bpd.

The two firms halted the bidding process for contracts for Yanbu in November amid uncertainty in financial markets and as the cost of raw materials plummeted.

Estimates for the cost of both the joint venture refineries had risen to around $12 billion from initial budgets of $6 billion.

The second 400,000 bpd joint venture refinery between Aramco and Total at Jubail would start up in 2013, Judaimi said.

The estimated cost of this refinery will be less than $10 billion, while the contracts for the plant will be awarded by the end of June, he said.

He did not not give an exact figure for the estimated cost. (Reuters)

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