|
Dubai: France's Total and Saudi Aramco are likely to go ahead with plans to build a 400,000 barrels per day (bpd) refinery in the kingdom despite escalating costs, an industry source in Saudi Arabia said yesterday.
The world's top oil exporter Saudi Arabia is planning four new plants as it looks to boost domestic refining capacity by as much as 1.6 million barrels per day from 2.098 million bpd.
But rising costs for equipment and labour have hit the energy sector worldwide, forcing project cancellations and delays and raising industry concern about the new Saudi plants.
"All the indications are good," the source, who is familiar with the project plans, said.
"There is definitely a willingness on both sides to go ahead and finalise the deal."
Total and Aramco would take a final investment decision on the plant in May or June, he added, declining to be identified.
The estimated cost of the new refinery and a similar plant Aramco is planning with US firm Conoco-Phillips, has risen above $10 billion from initial estimates of around $6 billion.
Both refineries will be complex and capable of processing heavy oil into oil products such as gasoline for export.
As future projects to expand oil output come online, Saudi Arabia will produce more of the heavy crude that most refiners find difficult and expensive to process.
|
