March 29, 2010 / 12:09 PM / 10 years ago

S.Korean firms submit keen bids for Yanbu refinery

* South Korean companies bid lowest for refinery packages

* Aramco-Conoco happy with the bids- sources

By Reem Shamseddine

KHOBAR, Saudi Arabia, March 29 (Reuters) - South Korean companies have submitted the most competitive bids for the construction of three big units for the Yanbu refinery state oil giant Saudi Aramco is building with U.S. ConocoPhillips (COP.N). industry sources said on Monday.

SK Engineering and Construction Co offered the lowest proposal for a crude unit package. Daelim Industrial Co’s 00210.KS bid was the lowest for a gasoline unit and GS Engineering and Construction (006360.KS) for a hydrocracker, sources said.

The 400,000 barrels per day (bpd) Yanbu crude refinery is among new plants Saudi Arabia, the world’s top oil exporter, plans to build as it looks to boost domestic refining by more than 1.7 million bpd from the current level of around 2.1 million bpd.

The bidding process was stopped due to uncertainties in global financial markets. Cost estimates for the Yanbu refinery on the Red Sea coast doubled in 2008 to $12 billion from an initial $6 billion when the project was announced in 2006.

“I believe yes, this is the latest information, South Korean companies bid the lowest but things may change, it is still not official...Yanbu is the first project this year...In that regard, all bidders were aggressive,” said one source.

Sources declined to disclose the value of their proposals as the process of evaluating the bids continued.

“People are desperate, prices were very low,” said a second source.

Aramco and Conoco were happy with the outcome of bids and are unlikely to hold a second round of negotiations with companies competing for the engineering, procurement and construction (EPC) packages of the refinery, sources said.

Although Aramco and Conoco have not yet officially announced the outcome of bids, sources expected both companies to make an announcement by the end of the month or mid-April. An award is seen in May.[ID:nLH69741]

Spain’s Tecnicas Reunidas (TRE.MC) is likely to have submitted the lowest proposal for a cocker unit package, Egypt’s Engineering for the Petroleum and Process Industries (ENPPI) bid the lowest for a tank farm package. Indian Punj Lloyd (PUJL.BO) is likely to be the front-runner for an offsites and pipelines package, sources said.

Aramco is also building a refinery of the same size with France’s Total (TOTF.PA). Bidding for that refinery had also been delayed sending contractors to the drawing board to revise bids and chop the construction costs to $9.6 billion from a highest estimate of $12 billion.

Reporting by Reem Shamseddine, Editing by William Hardy reem.shamseddine@thomsonreuters.com; +9663 8592898; Reuters Messaging: reem.shamseddine.reuters.com@reuters.net

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