Scheme will cost less than $9.6bn Jubail refinery
The partners behind the Yanbu refinery development in Saudi Arabia have opened final bids for some of the main construction deals on the scheme. The project is likely to come in at less than the cost of the similar Jubail refinery.
Prices for the engineering, procurement and construction (EPC) deals for the hydrocracker, coker unit and storage facilities on the project were opened on 8 February, according to senior executives at companies bidding on the deals.
Technical discussions are still ongoing for the gasoline and crude oil processing units, according to two executives taking part in those talks.
The companies competing for the deals only submitted commercial bids outlining proposed cost structures to the joint venture partners behind the scheme, Saudi Aramco and the US’ ConocoPhillips, on 26 January (MEED 26:1:10).
Contract awards are not expected to be made before March.
No clear frontrunners have emerged to win the deals, but the consensus among the bidders is that the overall cost of the project will come in under that of a similar scheme in the kingdom, the $9.6bn Jubail refinery.
A number of banks have also been approached to provide financing for the Yanbu refinery. Aramco is hoping to complete financing before the end of 2010.
Aramco has yet to complete financing for the Jubail refinery. It had hoped to have this in place before the end of 2009.
Both refineries are designed to process 400,000 barrels a day (b/d) of crude oil.
The partners behind the Jubail scheme, Aramco and France’s Total, reported in June 2009 that the price of the refinery had been cut by 20 per cent from estimates made the previous year. Aramco said at the same time that it expected to see similar savings on Yanbu, which had carried an estimated price tag of $10-12bn.
EPC costs peaked in 2008 as crude oil prices reached record highs of more than $147 a barrel. Demand for new oil and gas infrastructure also soared against a backdrop of climbing material costs.
The financial crisis of 2008-09 resulted in oil prices falling below $35 a barrel in January 2009 and billions of dollars worth of projects were put on hold. As a result, construction costs fell 19 per cent in the year to June 2009.
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