According to a company statement, the newly incorporated Red Sea Refining Co. will be responsible for the execution and operation of what has been described by industry experts as a landmark project.

Tecnicas Reunidas of Spain got the coker unit contract, South Korea's S.K. Engineering and Construction Co. will work on the crude unit, Daelim, also of South Korea, will build the gasoline and hydrocracker units, Saudi Services Co. will take care of the high voltage electrical units, Dayim Punj Lloyd will work on offsite pipeline facilities, Rajeh H. Al-Marri will take care of onsite pipeline relocation package and Egypt's Engineering for the Petroleum and Process Industries (ENPPI) will work on the tank farm units.

More contracts are expected to be awarded in the next few months, said the company statement.

While there is no official estimate on how much the Yanbu project is going to cost, John Sfakianakis, the chief economist at Riyadh-based Banque Saudi Fransi, told Arab News that it is expected to cost between $10 billion and $12 billion (around SR40 billion).

Early this year, the site preparation contract was awarded to Abdul Rahman Al-Shalawi Est. to ensure that the site would be ready for contractors.

Speaking at the award signing ceremony, Motassim Al-Maashouq, Saudi Aramco executive director of new business development, said: "Signing these contracts represents a critical milestone for the Yanbu Export Refinery Project and will pave the way for many other major activities in the region."

The Yanbu refinery project is one of a number of downstream projects that Saudi Aramco is pursuing. It demonstrates the company's clear commitment to meeting future worldwide fuel demand.

As part of its long-term strategy, Saudi Aramco is now making downstream investments following a massive upstream program that increased the company's crude oil capacity to 12 million barrels per day.

The project will build a new "grassroots" refinery in Yanbu industrial city and will process 400,000 barrels per day of Arabian Heavy crude and produce 90,000 barrels per day of gasoline, 263,000 barrels per day of ultra-low sulfur diesel, 6,300 metric tons per day of coke and 1,200 metric tons per day of sulfur.

The new refinery will use existing Saudi Aramco facilities to receive crude oil and export the refined products. It will include refinery process units, utilities and interconnecting piping, associated feedstock and refined product storage, as well as offsite facilities necessary to support the safe and efficient operation of the refinery.

The signing of the EPC contracts is a culmination of a process that started in January 2006, when a team commenced the development of the base configuration and preliminary engineering, and initiated the selection process for the contractor and process technology licensors.

"We have taken many steps along the way to ensure the Yanbu project will pioneer many firsts for the Kingdom in the areas of detailed engineering, human resources development, and support of local equipment and material manufacturers," said Fahad Al-Helal, the designated president and CEO of the Red Sea Refining Co. "Approximately, 70 percent of the total project value will be spent within the Kingdom."

Al-Helal reiterated the project's commitment to local sourcing. "We have mandated that more than one million man-hours in detailed engineering must be executed in the Kingdom. That includes the full execution of the detailed engineering of the refinery's Sulfur Recovery Unit in the Kingdom, which is the first time a major process unit of this size will be fully executed within the Kingdom," he said. "In addition, several in-Kingdom lump-sum turnkey packages will be executed covering cross-country pipelines, communication and electrical work. We will also make maximum use of the Saudi work force during the detailed engineering and construction phases."

According to Al-Helal, the international EPC contractors are committed to the hiring and training of Saudi engineers in the fields of process and mechanical engineering at their worldwide offices during the detailed engineering phase.

"Among our main objectives are the development of young Saudi professionals, helping technology transfer to the Kingdom and maximizing local content in all goods and services used by the project," he added.