DUBAI (Dow Jones Newswires), October 13, 2008
Saudi Arabian Oil Co. plans to upgrade its aging onshore Dammam oil field, first tapped in 1938, to produce 100,000 barrels a day of crude at an estimated cost of $1.2 billion, people familiar with the plans said.
The state-run oil company, better known as Saudi Aramco, is close to inviting engineering firms to make initial bids for the contract to carry out a study on the project that will upgrade the Dammam field, the people said.
Preliminary industry estimates put the cost of developing the field, located on the Persian Gulf coast in Saudi's Eastern Province, at as much as $1.2 billion.
Companies such as Foster Wheeler Ltd., KBR Inc., SNC-Lavalin Group Inc. and WorleyParsons Ltd. are likely to be interested in bidding for the concept study, the people said.
Saudi Arabia made the first commercial oil discovery at the Dammam field in 1938. Today, the kingdom holds the world's largest oil reserves at 264.2 billion barrels, according to the BP Statistical Review.
The project comes on top of existing large-scale Saudi oil field developments such as Khurais, Khursaniyah and Manifa aimed at taking the kingdom's crude production capacity to 12.5 million barrels a day of crude oil by the end of 2009.
The latest plans for the Dammam scheme are emerging amid a three-month slump in crude oil prices by about $70 from a record high of above $147 a barrel in July.
Light, sweet crude for November delivery on Friday settled $8.89, or 10.3%, lower at $77.70 a barrel on the New York Mercantile Exchange, the lowest settlement since Sept. 10, 2007.
Further declines in oil prices would be a concern for oil producers such as Saudi Arabia, the world's largest crude exporter, which needs prices to remain above $49 a barrel to avoid a fiscal deficit, a senior International Monetary Fund official told Dow Jones Newswires in September.
The Organization of Petroleum Exporting Countries will meet on Nov. 18 in Vienna to discuss deteriorating oil prices amid fear that a global economic recession will hit oil demand. Saudi is OPEC's top producer, presently pumping about 9.4 million barrels a day.
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