State oil giant Saudi Aramco has suspended plans to build a $2 billion clean fuels plant at its largest oil refinery in Ras Tanura, three industry sources said.
The energy project appears to be one of the first suspended in Saudi Arabia in response to the halving of the oil price in the last six months.
The Ras Tanura clean fuels project, including a naphtha hydrotreater, was to be part of a second phase of upgrades to Aramco’s refineries, and was originally due to go on stream in 2016.
“They withdrew the bidding,” said one source familiar with the matter, adding that no reason was given for the move.
Another source said: “They indicated they will postpone the project by a year and rebid.”
He told Reuters that Aramco was evaluating its projects following the fall in oil prices to determine which should have priority.
Aramco’s Chief Executive, Khalid al-Falih, said in November that the cyclical moves of oil markets would not take Saudi Aramco’s long-term corporate strategy off track.
Company officials were not available to comment.
Aramco invited bidders in 2013 for the Ras Tanura project but later decided to hold another round as proposals were higher than its budget. The company also cancelled one of the packages for paraxylene production after finding it was not economically feasible.
The new round of bidding was due to close in mid-November but was postponed before the decision was taken to delay the project, one of the sources said.