Total, Aramco to set up $6bn refinery

05/22/06 - newratings.com

LONDON, May 22 (newratings.com) – French oil giant Total SA (FP-EUR) has joined hands with Saudi Arabia’s state oil firm, Aramco, to build an export-oriented oil refinery at an estimated cost of $6 billion. The two companies signed a memorandum of understanding to this effect on Sunday.

The refinery, in which both Total and Aramco will hold a 35% stake each, is to be built in Jubail on the Gulf Coast. The refinery will have a capacity to process 400,000 barrels of crude per day and is expected to be operational by 2011. The remaining 30% stake in the refinery is proposed to be offered to the public in Saudi Arabia in the near future. The crude oil for processing at the refinery will be supplied by Aramco, while the marketing will be handled by both partners in the joint venture.

Aramco’s president, Abdullah Jum’ah, said that the proposed project is in-line with the kingdom’s attempts to meet the growing demand for energy, besides attracting increased foreign investment in the region. Aramco is also expected to sign an agreement in the near future with US-based ConocoPhilips (COP) to set up another refinery of similar capacity in the Red Sea coastal city of Yanbou.