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Jizan Refinery Start Faces 6 to 12 Months Delay

Source: Reuters 7/10/2013, Location: Middle East

Saudi Aramco's oil refinery in Jizan will be delayed by 6-12 months because work on associated infrastructure is behind schedule and the contract to build a plant to supply it with power has not been awarded yet, three industry sources said.

"The infrastructure is not ready... they will try to catch up with the plan but I think it will be delayed by more than six months," one source familiar with the project's progress said.

In November, Aramco signed deals worth an estimated $6 billion for the 400,000 barrels per day (bpd) refinery project, which is part of plans to build an industrial city to revive the impoverished region bordering Yemen.

The complex had been scheduled to be completed in late 2016 but delays in dredging port areas, needed to bring equipment in by sea, is holding up progress of other parts of the project.

Another source said that even if delays to other parts of the project are overcome, the refinery will not be able to start up in late 2016 because the contracts to build the integrated gasification combined cycle (IGCC) power plant have not been awarded yet.

The sources said the delay could be between six and 12 months. Saudi Aramco declined to comment.

The refinery will process heavy and medium crude oil into around 75,000 bpd of gasoline and 250,000 bpd of ultra-low-sulphur diesel. Products will also include liquefied petroleum gas, sulphur, asphalt, benzene and para-xylene.

Saudi Aramco has invited bids for the construction of the 2,400 megawatt (MW) IGCC plant. Bidding is due to close mid-August but some sources expect bidding to be extended because of the Islamic fasting month of Ramadan.

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