The outlook for firms working in the downstream oil and gas projects sector is brighter than it has been since oil prices started their drawn-out fall from $147 a barrel in July 2008.

Demand for gasoline is rising in the US, the world’s biggest consumer and crude prices are now back above $80 a barrel from lows near $30 a barrel in the first quarter of 2009. With improving fundamentals, major projects in the UAE and Saudi Arabia that ground to a halt in 2008 and 2009 are now moving cautiously ahead.

But the speed-bumps that have slowed several massive refining and petrochemicals projects in Saudi Arabia show that the future for major new projects in the sector is far from rosy.

Saudi Aramco and the US’ Dow Chemical have decided to relocate their $17bn petrochemicals joint venture in the kingdom from Ras Tanura to Jubail, cutting down its scope to use ethane gas and propane as the principle feedstocks rather than the gasoline product naphtha.

The decision has major ramifications for three other projects in the kingdom.

Aramco is cancelling a 400,000 barrel a day expansion of its Ras Tanura refinery, speeding up the construction of its $7bn Jizan refinery, albeit in a stripped-down form, and attaching the petrochemicals complex to its joint venture refinery at Jubail with France’s Total.

Meanwhile, on 21 April both Aramco and ConocoPhillips announced that the US energy firm was pulling out of their planned $10bn refinery project at Yanbu as it no longer fits in with its long-term strategy. Conoco wants to produce oil and gas then sell it, not buy and refine it, and then try to make a profit on international markets.

Aramco is fortunate because it has the money to see these schemes through and has decided to go it alone on Yanbu to avoid delays. It is a situation it will have to get used to in the future.