Contractors tighten belts for Saudi refinery bids

DUBAI (Reuters) – Contractors will have made aggressive cuts to cost estimates in bids due later this month to build a new refinery for Saudi Aramco and Total (TOTF.PA), sources at contracting companies said on Thursday.

Oil’s slump to around $50 a barrel from a peak over $147 last year has forced cost cutting across the industry, and contractors that were turning down work a year ago now find themselves in a fierce competition for what is left, sources said.

“With the current economic situation, there are not many projects,” one contractor planning to bid to build the refinery told Reuters. “Competition is much more severe. We need to sharpen our pencils.”

Top oil exporter Aramco and French energy giant Total have said they want billions of dollars cut from the construction costs for the refinery to reflect the slump in the prices of raw materials since the global economic downturn took hold.

Reuters