http://www.theaustralian.news.com.au/story/0,25197,22821519-5005200,00.html
Worley shares soar on Saudi talks
Andrew Harrison, Dow Jones Newswires | November 26, 2007
WORLEYPARSONS said today it is in advanced talks with Saudi Arabian Oil, the world's largest oil company by production, about building a $9 billion refinery.
The engineering company may manage the construction of a planned 400,000 barrel-a-day refinery in eastern Saudi Arabia, which will process Saudi heavy crude oil and supply the local market, people familiar with the process told Dow Jones Newswires on Sunday.
Shares in WorleyParsons (ASX: WOR: quote) were up 6.3 per cent at $45.51 by late afternoon. The stock has more than doubled in the past year, compared with a 14 per cent increase in the benchmark S&P/ASX 200 Index.
WorleyParsons, which posted 62 per cent rise in net profit to $224.8 million last year, has been growing its business through acquisitions, including the $1.13 billion acquisition of a Canadian oil sands construction services company in February, and new hydrocarbon projects overseas.
The contract to build the East Coast refinery at Ras Tanura - where Saudi Arabian Oil, or Saudi Aramco, is already operating a 550,000 barrel-a-day facility, the kingdom's largest - is expected to be tendered in 2009.
WorleyParsons, whose customers include three of the world's four biggest oil producers, said it is in advanced stages of talks with Saudi Aramco about the project.
"Until the contract is finalised and executed, the company is not in a position to advise further on its value or scope," it said in a statement. "Further details of this project will be announced in the event that the negotiations are finalised and the contract executed."
Earlier, a company spokesman declined to comment on a Dow Jones report that named WorleyParsons as a candidate for the plant in competition with New Jersey-based Foster Wheeler and Canada's SNC-Lavalin Group, which also have submitted bids.
"Saudi Aramco has been a major client for a number of years and we enjoy a good working relationship with the company," a spokesman said.
Saudi Aramco is expected to award the contract in November for the East Coast refinery, the fourth new such facility to be built in Saudi Arabia, and which will increase total refining capacity to more than 3.5 million barrels a day by 2012, more than double the UK's capacity.
Refinery technology is being tendered separately from the project management and front-end engineering design contract that will be signed with WorleyParsons.
Persian Gulf governments, flush with cash from four years of high oil prices, are investing in new crude oil refineries to meet rising demand and tighter specifications for products such as gasoline and diesel.
Some Organisation of Petroleum Exporting Countries members have partly blamed a lack of global refining capacity for ongoing high oil prices.
Aramco last year signed joint venture agreements with Total and ConocoPhillips to build two 400,000-barrel-a-day export refineries on the country's east and west coasts.