April 21, 2010 at 11:52 am #2696
UPDATE 2-Conoco pulls out of Saudi refinery project
NEW YORK, April 21, 2010 (Reuters) – Oil giant ConocoPhillips said on Wednesday it canceled plans to build a new refinery with Saudi Aramco in the Middle East, citing its strategy to reduce its refinery operations.
The planned refinery was to be built by the two oil companies in Yanbu Industrial City, Saudi Arabia, and have a processing capacity of 400,000 barrels per day.
Conoco, like other major oil refiners, has seen profits shrink at its plants that turn crude oil into gasoline and diesel fuel as the global economic slowdown has eroded demand.
“We ultimately decided this project was not consistent with our current strategy to reduce our downstream footprint,” Willie Chiang, senior vice president for refining, marketing and transportation, said in a statement.
Last week, Conoco sold its stake in a Canadian oil sands project to China’s Sinopec for $4.65 billion as part of its program to sell $10 billion in assets to help reduce its heavy debt burden.
Aramco said in a statement it was evaluating options to progress with the planned refinery.
Top oil exporter Saudi Arabia has switched its development focus to refining, petrochemicals and gas after boosting its oil production capacity to 12.5 million barrels per day (bpd) last year.
The Yanbu plant on the Red Sea coast is one of several at which the kingdom is planning to hike its refining capacity by more than 1.7 million bpd from 2.1 million bpd.
Industry sources told Reuters last week that Aramco and Conoco had planned to contract with South Korea’s SK Engineering to build a crude unit, Daelim Industrial for a gasoline unit, and GS Engineering to build a hydrocracker.
Spain’s Tecnicas Reunidas would build a coking unit and India’s Punj Lloyd oil storage units, according to the sources.
Shares of Conoco rose less than 1 percent in premarket trading.
(Additional reporting by Reem Shamseddine in Khobar, editing by Gerald E. McCormick, Dave Zimmerman)
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