UPDATE 2-Saudi Aramco, Total to go ahead with new refinery

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DUBAI, May 14 (Reuters) - State oil giant Saudi Aramco and France's Total (TOTF.PA) have decided to go ahead with plans to build a new 400,000 barrels per day (bpd) refinery in Saudi Arabia, Aramco and Total said in a joint statement on Wednesday.

The plant is one of four that the world's top oil exporter aims to build to boost domestic refining capacity by as much as 1.6 million bpd from 2.1 million bpd.

The refinery on the Gulf coast at Jubail will start up at the end of 2012, the companies said.

They provided no details as to the cost of the plant.

Equipment and labour shortages have pushed costs up globally in the energy sector, raising industry concerns about whether the new Saudi plants would be built. Industry sources have pegged the cost of the new plant at over $10 billion, up from the initial estimate of around $6 billion.

"We can't give an estimated cost yet as we are going to have to wait for the results of tenders, but it will certaintly be above the initial $6 billion that were announced," a source close to the situation told Reuters.

The refinery will be a complex plant able to convert the increasing quantities of heavy crude Aramco plans to produce in the future into transport fuels.

"Saudi Aramco and Total will contribute to supply growing demand for transportation fuels and petrochemicals, especially in Asia and the Middle East, but also in Europe where the deficit of diesel is growing," Michel Benezit, Total's president of refining and marketing, said in the statement.