PARIS, 17 May 2008 — Total Chief Executive Christopher de Margerie yesterday estimated that a project to build a new 400,000 barrels per day refinery in Saudi Arabia will cost more than $10 billion.
Total had originally pegged the cost of the plant, in which the French oil major will have a 37.5 percent stake and Saudi Aramco the rest, at $6 billion.
“Jubail is a project at over $10 billion,” de Margerie told a meeting of the company’s shareholders in response to a question on Total’s investment plans. He later declined to give journalists a more precise estimate.
“We are about to start a bidding period and we do not want to send signals to contractors that would make prices surge in an environment where prices are already sharply higher. “We don’t want to give them a target, but you know this is a project of more than $10 billion.”
Saudi Aramco said on Wednesday that it and Total would go ahead with plans to build the Jubail refinery, which it expects to start up at the end of 2012.
Equipment and labor shortages have pushed costs up globally in the energy sector, raising industry concerns about whether the new Saudi plants would be built.
Aramco will own 62.5 percent of the plant but will later offer 25 percent to the Saudi public, leaving both Aramco and Total with an equal 37.5 percent share in the plant.
The companies are due to invite companies to bid for the plant’s construction in June, with all packages for construction set to be awarded in the first quarter of 2009.
