Saudi Arabia may shelve for years plans for a 400,000 barrels per day refinery expansion at Ras Tanura, industry sources said.

The kingdom put the $8 billion project on hold last year, one of several schemes held up while the world's top oil producer aimed to take advantage of the economic slowdown to drive down the cost of new projects.

But while state oil firm Saudi Aramco and partners have since proceeded with other new refinery plans, expansion of Ras Tanura stayed on hold and preliminary design work has slowed, the sources said.

Contractor Worley Parsons, which holds the contract for both front-end engineering and design and project management, has taken staff off the project and halted work in the last two weeks, industry sources said.

'Work on the Ras Tanura refinery expansion stopped about two weeks ago,' said one industry source familiar with the plans on Thursday.

'Aramco never says a project is cancelled, it's postponed for months to years. This one they are talking about five years or more postponement.'

An Aramco spokesman declined to comment on the status of the project.  'Our contract remains intact, however the client has deferred the project,' a spokesman from Worley Parsons said.

The Aramco board would likely take a decision on the project and a related petrochemical plant in April, another source said.

The Ras Tanura expansion plan was part of a wider scheme within the kingdom to boost refining capacity by more than 1.7 million bpd from the current level of around 2.1 million bpd.-Reuters