New routes to refining: the private sector has been offered a huge opportunity to move into refining--but now it must rise to the challenge.(REFINING)

Dhahran-based independent consultant Yahya al-Zaid has a reputation to defend. With a career spanning more than three decades with Saudi Aramco --where he rose through the ranks to the position of vice-president--Al-Zaid has recently been recalled from retirement.

"He is one of the best we have," says Prince Faisal bin Turki bin Abdulaziz, adviser at the Petroleum & Natural Resources Ministry. "He built the bulk refining plant in Jizan in 1972 and was subsequently involved in several other refinery and related projects. We have now entrusted him with the most challenging oil project in the kingdom."

Prince Faisal is referring to a new grassroots worldscale export refinery that Saudi Arabia plans to build in Jizan in the southwest. Al-Zaid will head a ministry team that will seek investment from the local private sector and international oil companies (IOCs) to construct a 250,000-400,000-barrel-a-day (b/d) state-of-the-art facility.

The proposed refinery will be the third such project to be built. This summer, Saudi Aramco announced it had signed a memorandum of understanding each with Total of France and the US' ConocoPhillips to build 400,000-b/d facilities at Jubail 2 in the Eastern Province and at Yanbu on the Red Sea. Front-end engineering and design (FEED) work is ongoing for both schemes, which will entail a total capital expenditure of about $13,000 million.

Jizan may not be the last worldscale refinery planned in the kingdom. "There is a possibility of another one to be built to boost [the economic development of] under-developed areas," says Al-Zaid. "But, for the time being we are focusing on Jizan and no other site has been identified."

An ambitious timetable has been set for construction of the Jizan refinery. The ministry will issue expressions of interest for the position of developer by January, with a request for proposal to be followed by the summer and selection targeted by end-2007. "We will be following an aggressive bidding schedule and the aim will be to have partners on board at the earliest. On-site [construction] work is planned to start in early 2008, with commission targeted in 2011," says Al-Zaid.

Private sector