Saudi Aramco and Total Confirm $10 Billion Refinery Construction Project in Jubail

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Researched by Industrial Info Resources (Sugar Land, Texas)--Saudi Arabia's national oil company, Saudi Aramco, and the French energy company Total S.A. (NYSE:TOT) (Paris) have confirmed their investment in a 400,000-barrel-per-day refinery in Jubail, Saudi Arabia. The $10 billion refinery will process heavy crude oil from Saudi Arabia into high-quality oil products that meet stricter environmental standards. The refinery is scheduled to be completed by the end of 2012.

Saudi Aramco said that this refinery is one of four to be built by Saudi Arabia in an effort to raise the daily refining capacity of the world's largest oil-exporting country from 2.1 million barrels to 3.7 million barrels. The global shortage of equipment and labor has greatly increased the cost of refinery construction, and construction costs of the new refinery in Jubail have risen from the initially budgeted $6 billion to $10 billion.

Saudi Aramco and Total will establish a joint venture company for this refinery in the third quarter of this year. Invitations for construction bids will be given this month. All the relevant information regarding the construction of the refinery will be publicized in the first quarter of 2009. Saudi Aramco will hold 62.5% of the shares in this refinery, and Total will hold 37.5%. Saudi Aramco will later sell 25% of its shares to Saudi citizens so that the two companies will hold equal shares in the project.

The new refinery will be able to turn Saudi Arabia's constant and increasing production of heavy crude oil into transportation fuel. Total and Saudi Aramco will be able to provide the world, especially Asia and Middle Eastern areas, with transportation fuel and petrochemical products.

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