ConocoPhillips delays Saudi refinery plans
By David Hannon -- Purchasing, 12/11/2008 2:00:00 AM
With so much uncertainty in global economic markets, even projects that seemed like a sure thing only a few months ago are being shelved or cancelled altogether. In early November, oil giant ConocoPhillips announced it was delaying its plans to team up with Saudi Aramco on the construction of a multi-billion dollar refinery in Saudi Arabia.
The project, which would create a massive 400,000 barrel/day refinery, was in the construction bidding process, with a round of bids expected this year. Instead, the partners say the project will be rebid in the second quarter of 2009.
"We believe that this short delay will allow the markets to adjust from the current uncertainties and provide a stronger basis for the long-term success of the refinery," ConocoPhillips CEO Jim Mulva said in a statement.
The ConocoPhillips move is the latest in a string of energy-related companies putting the brakes on expansions planned when oil and gas prices were sitting at all-time highs. Marathon Oil recently delayed plans to expand a Detroit-area refinery and said that it was in the process of reevaluating the project construction schedule based on new cost estimates. Marathon spokeswoman Angelia Graves told Detroit News that "market dynamics have changed." The Houston-based company expects its 2009 capital spending to be about 15% lower than 2008.
Valero said recently it will postpone plans to build a coker at its Port Arthur, Texas refinery for processing heavy crude oil into lighter products. And it will delay building a hydrocracker at the same plant by one year to 2011.
In its third-quarter earnings, Sunoco said it has decided not to proceed with the previously announced capital improvement project to upgrade a Tulsa, Okla. refinery, which will reduce planned spending by approximately $375 million.
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