KHOBAR - Saudi Aramco has signed contracts with international firms to build a multi-billion dollar refinery at Yanbu on Red Sea coast, the state-run company said on Wednesday. The 400,000 barrels per day (bpd) refinery accounts for just under a quarter of Saudi's plans to add 1.7 million barrels per day of refining capacity. It was to have been built by US oil firm ConocoPhillips and Aramco in Yanbu Industrial City, but Conoco pulled out of the plans in April. Under the deals signed on Wednesday, South Korean firms Daelim and SK Engineering & Construction Company were awarded contracts to build three of the main processing units. Other winners included Spain's Tecnicas Reunidas, Dayim Punj Lloyd (Saudi Arabia), a unit of Punj Lloyd, and Egypt's Engineering for the Petroleum and Process Industries (ENPPI), a Saudi Aramco statement said. In addition, Saudi Arabia's Rajeh H. Al-Marri and Saudi Services signed infrastructure deals. Saudi Aramco in its statement did not reveal the value of the contracts, but industry sources said Tecnicas' contract was worth around $700 million to $800 million and ENPPI's contract was around $400 million. The total cost of the refinery has been estimated at $10 billion, down from cost projections of around $12 billion when oil prices were at their height in 2008. The complex refinery is slated to process heavy crude from Saudi Arabia's project to pump 900,000 barrels per day from the Moneefa oilfield. It is a sister project to another 400,000-bpd refinery that Aramco is building with France's Total at Jubail on Saudi Arabia's east coast. Oil majors have retreated from the refining business in many parts of the world as margins shrank during the record oil price rally of 2008 followed by economic recession and reduced demand for refined products. But margins have begun to recover and strong future demand is expected in Asia and the Middle East. Profitability has also been improved by cheaper construction costs. Conoco and Aramco asked contractors to submit revised bids in January to take into account the lower costs of raw materials after the global economic slowdown. Following Conoco's withdrawal in April, Saudi Aramco asked engineering firms to extend the validity of bids by 60 days. One contract to build a unit to handle solids, has yet to be awarded. Bidding for that unit closed on July 6. Oil prices fell on Wednesday after a huge unexpected jump in crude stockpiles in the United States added to nerves caused by fading consumer confidence. New York's main contract, light sweet crude for delivery in September, dropped 51 cents to $76.09 a barrel. London's Brent North Sea crude for September shed seven cents to $76.06. Oil prices fell by more than a dollar Wednesday.
