Saudi Arabia again delays bids for Jizan refinery

Saudi Arabia has delayed for the third time a tender for bids for a projected 250,000-400,000 b/d refinery in the southwestern province of Jizan, according to local media.

Eric Watkins
Senior Correspondent

LOS ANGELES, June 5 -- Saudi Arabia has delayed for the third time a tender for bids for a projected 250,000-400,000 b/d refinery in the southwestern province of Jizan, according to local media.

"We were informed of the delay…and we are awaiting more clarifications," a source from one of the consortia bidding for the project told the Al Watan newspaper. No reason was cited for the delay.

Al Watan did not name the source, but said Bechtel, Foster Wheeler, Technip, and Snamprogetti are among the foreign companies that have set up consortia with Saudi firms to bid for the project.

Other interested firms include Petronas, Formosa Petrochemical Corp., Reliance Industries, China National Offshore Oil Corp., and Petroleo Brasileiro SA (Petrobras).

The Saudi government has approved eight domestic firms to participate in joint ventures: Nama Chemicals, al-Arabiya for Water and Energy Development, Advanced Petrochemicals and Refineries, National Industrialization, Obeikan Investments, Arabian Peninsula for Industrialization and Petroleum Services, Taqaat and Adbel-Kader al-Bakry and Sons Industrialization.

In April, the Saudi oil ministry said it planned to proceed with the project and would invite bids in May to build and operate the Jizan facility.

"It will be opened at the end of May," said Abed Al-Saadoun, the oil ministry point person for Jizan, regarding the bidding. He added that the refinery would have capacity of as much as 400,000 b/d. Saudi officials earlier said the plant would have capacity of 250,000-400,000 b/d.

Under the original tendering schedule, a request for proposals was to be issued to prequalified companies in the second quarter of 2007, with bids submitted early in the fourth quarter.

The ministry's aim was to award the license before the end of 2007, but its plans changed due to a delay in July that year. Revised plans were pushed back again in January.

Various reasons have been cited for the earlier delays, including the need to relocate due to the potentially adverse environmental effects in the originally chosen location.

Other reasons concern project financing. The Saudi government wants international oil companies to participate in the project. But several IOCs have declined to participate, citing concerns over commercial drawbacks to the project.

"The refinery in the west is not something that Chevron [Corp.] would be participating in," Chevron Vice-Chairman Peter Robertson told reporters in Saudi Arabia on the sidelines of the February 2007 Jeddah Economic Forum. "It wouldn't make strategic sense to participate in a refinery there," Robertson said.

Contact Eric Watkins at hippalus@yahoo.com.

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