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Aramco JV plant expansion to cost $1bn

Dubai, February 23, 2010

Saudi Aramco Lubricating Oil Refining (Luberef) expects the cost of expanding its Yanbu refinery to be nearly $1 billion, an Aramco executive said on Tuesday.

Luberef, established in 1976, produces around 550,000 tonnes per year (tpy) of oil lubricants at its two refineries on the kingdom's Red Sea coast at Jeddah and Yanbu.

'The refinery will produce oil of type three, which is used in high quality car engines ... the project will cost around $1 billion,' Salih Thani, supervisor of contracts and insurance at Luberef, told Reuters.

The expansion of the Yanbu refinery, which has a current capacity of 280,000 tonnes per year (tpy) of oil lubricants, would produce a new type of base oil, which Thani said is new to the region.

'There are no refineries in the Gulf region that produce this lubricant and there is very good demand for it in the Gulf and we could even export to Europe, India and Far East countries,' Thani said.

He declined to say by how much the refinery would be expanded.

Japan's JGC Corp, Italy's Saipem, Foster Wheeler and US Jacobs Engineering are among firms due to submit bids for the refinery's front-end engineering and design (FEED) by March 15.

But Luberef would only launch the engineering, procurement and construction (EPC) bids by the beginning of 2011, said Thani.

'This project will probably take about five years of construction and after that will be operational,' Thani added, without providing a specific start-up date.

US firm ExxonMobil sold Saudi Arabia's Jadwa Industrial Investment its 30 percent stake in Luberef in 2007. Aramco holds the remainder.

Industry sources had said at the time Aramco wanted Luberef to expand, which did not fit in with Exxon's plans in the lubricant market. – Reuters




Tags: Dubai | aramco | Expansion | Luberef | Lubricating Oil Refining |

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