French partner for KSA refinery

Saudi Aramco and French oil firm, Total, have signed an agreement to build a 400,000 barrel per day (bpd), export-oriented refinery

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By  O&GME Staff Published  June 6, 2006

Saudi Aramco and French oil firm, Total, have signed an agreement to build a 400,000 barrel per day (bpd), export-oriented refinery in the kingdom at a cost of around US $6 billion. The full-conversion refinery in Jubail on the Gulf coast is designed to process Arabian heavy crude oil and is scheduled to start up in 2011, state oil firm Aramco said in a statement. According to the memorandum of understanding, Aramco and Total would form a joint venture firm, with each holding a 35% stake. Up to 30% ownership in the project is planned to be offered to the Saudi public in the future. Saudi Aramco chief executive, Abdallah Jumah said the global energy industry was now less flexible partly due to chronic under investment in facilities and infrastructure, especially in refining. “Perhaps nowhere along the value chain do we see capacities as tight as they are in the refining sector. Crude oil is of little good to the average end-user until it is refined into useful products, and at the moment, our industry’s ability to do that is being stretched,” Jumah said. “This facility in particular...not only eases tight refining capacities, but also addresses the mismatch between available crude supplies and refinery configurations that is complicating today’s market situation,” he said at the signing in Dhahran. Organisation of petroleum exporting countries (Opec) has constantly voiced its concern over a bottleneck in the refining capacity, which is pushing crude prices upwards. Saudi Aramco is also hoping to sign a memorandum of understanding with ConocoPhillips for a 400,000 bpd refinery in Yanbu by the end of May. Apart from a partnership in refining, Saudi Arabia is also looking to finalise several other deals with France, including one to buy fighter jets and border security systems. French giant, Total, gained a foothold in the kingdom when it joined Royal Dutch Shell in 2003 in the first exploration project awarded to foreigners. “This agreement reinforces our presence in Saudi Arabia and through this long-term project strengthens our close co-operation with Saudi Aramco,” Total chief executive, Thierry Desmarest said.

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