The joint-venture of state-owned oil company Saudi Aramco and the local Jadwa Industrial Investment Company is to launch an expansion of its lube base oil refinery at Yanbu on the Red Sea coast in the first quarter of 2010.

One source close to the project tells MEED the joint venture, Saudi Aramco Lubricating Oil Refining Company (Luberef), will launch the prequalification process by issuing an invitation to bid on the project once the London office of US contractor Bechtel Corporation has completed a pre-feasibility study on the upgrade.

“This project will really move ahead in the early part of next year, but the initial approach to contractors was first made in October,” says the source.

At least six contractors were contacted in the third week of October to ask about their availability for a front-end engineering and design (Feed) contract to design the expansion of the refinery, the source adds.

The project involves expanding Yanbu’s refinery facilities to include a 23,000 barrel-a-day (b/d) lube oil hydrocracker and dewaxing unit, which will allow additional varieties of lube oil to be produced. Luberef also plans to build a vacuum distillation unit with a capacity of 14,000 b/d.

The joint venture plans to build a facility to supply 12,000 b/d of asphalt and undertake modifications to its existing pipelines to transfer products to the nearby Samref and Yanbu refineries.

Luberef produces 4 million barrels a year of lubricating base oils.

Luberef was set up in 1976 as a 70:30 joint venture of Aramco and US energy major ExxonMobil Corporation. Jadwa took over from ExxonMobil when it bought the international oil company’s 30 per cent stake in Luberef in November 2007.

Aramco and US oil major Conoco-Phillips are planning to build a 400,000-b/d oil export refinery at Yanbu by 2014. Bids for all of the main construction packages at Yanbu are due on 31 January 2010.