Saudis extend Jazan refinery deadline to 2015

Riyadh: The Jazan refinery in Saudi Arabia is expected to come online in the first quarter of 2015, the Petroleum and Mining Ministry said on Friday, after reports of fresh delays hitting the planned export-oriented refinery.

MEED magazine last week reported that bidders lining up to build the refinery have been issued a fresh construction deadline of 2015 - a two-year delay to the original schedule.

State news agency SPA carried an apparent denial of reports of delays, citing an unidentified official from the petroleum ministry.

"Procedures ... are progressing ... according to time schedule set in the request for proposals document and there is no further delay," SPA quoted the official as saying.

Civil engineering and detailed planning as well as the financing of the project will take 18 months at the latest and construction works will take a maximum four years, he said. "Commercial operations will be in the first quarter of 2015," it added.

Detailed proposals

The ministry said last month it would name the winning bidder for this project by the end of the second quarter of 2009 after setting a March 7, 2009 deadline for prequalified companies to present detailed proposals to build the refinery in Jazan.

The tender for the 250,000 to 400,000 barrels per day refinery has been delayed several times. Initial plans were to open bidding in the second quarter of 2007.

The ministry released an incentives package to bidders in September, along with Riyadh's request for proposals and the revised completion date, MEED said. Spiralling costs have cast doubt over the viability of new oil refineries worldwide, and industry observers have been sceptical over the Jazan plan since it is a long way from crude production facilities.

The government unveiled plans to build the refinery in 2006 and said it would be 100 per cent privately owned, with an initial public offering to take place once the refinery was deemed viable.

Prequalified

The project is part of government plans to give an economic boost to the impoverished region of Jazan in the far south near Yemen, on the Red Sea coast.

The ministry said last year that eight Saudi and 43 international companies had prequalified to take part in the Jazan tender. State oil firm Saudi Aramco is listed as one of the prequalified international companies.

International companies interested in building the refinery must submit their bids in partnership with one of the qualified local companies.