Building an oil refinery is not easy and building it in the one of the poorest areas of Saudi Arabia has always been a challenge.
The geographical location is the main obstacle. Jizan province is located in the south of the kingdom on the Red Sea coast and bordering Yemen. Most of Saudi Arabia’s oil fields are in the north on the Gulf coast.
In addition to its isolated geography, the Jizan refinery was supposed to be Saudi Arabia’s first independent oil refinery project. Usually when Saudi Arabia announces a multi-billion dollar refinery project companies are desperate to be involved. That did not happen with Jizan. No-one really wanted to build it.
Saudi Aramco has had to take over the project and split it into two phases to ensure that the facility would go ahead.
Despite the lack of interest, Saudi Arabia is determined to press ahead with the scheme. It realises that Jizan province is in need of major investment and residents need jobs. The refinery is part of a plan to provide both.
Considering the challenges of building in a remote area close to the Yemeni border, Aramco’s decision to delay the award of the combined front-end engineering, design (feed) and project management services contract at the $7bn Jizan Refinery is not a major setback.
The project still has several years left to run so any time lost now can quite easily be made up in the future. Most engineering contractors have such complex project management systems in place now that small delays can be dealt with and are accepted as normal on a project as large as the Jizan refinery.
So while the contractors hoping to win the feed contract will be waiting nervously for Aramco’s decision after the Eid holidays, in the grand scheme of things this is just a minor blip for Jizan.