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Sun 7 Sep 2008 10:45 PM

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Saudi Arabia invites bids for Jazan refinery

Spiralling construction costs are casting doubt on the remote refinery's viability.

Saudi Arabia's oil ministry said on Sunday it had set March 7, 2009 as the deadline for prequalified companies to present detailed proposals to build an export refinery in Jazan.Eight companies already shortlisted by the ministry could now download a "request for proposal" package from the refinery website (www.jazanrefinery.com), it said in a statement.

The tender for the 250,000 to 400,000 barrels per day (bpd) refinery has been delayed several times - initial plans were to open bidding in the second quarter of 2007.

Spiralling costs have cast doubt over the viability of new oil refineries worldwide, and industry observers have been sceptical over the Jazan plan since it is a long distance from crude production facilities.

The project is part of government plans to give an economic boost to the impoverished region of Jazan in the far south near Yemen, on the Red Sea coast.

The request for proposals is aimed at companies the ministry has vetted as qualified to build and operate the refinery.

The ministry said last year that eight Saudi and 43 international companies had prequalified to take part in the Jazan tender. State oil firm Saudi Aramco is listed as one of the prequalified international companies.

International companies interested in building the refinery must submit their bids in partnership with one of the qualified local companies.

The government unveiled plans to build the refinery in 2006 and said it would be 100 percent privately-owned, with an initial public offering to take place once the refinery was deemed viable. (Reuters)

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