PARIS (Dow Jones)
French oil major Total SA (TOT) Chief Executive Christophe de Margerie said Friday said the 400,000 barrel a day refinery it intends to build jointly with Saudi Arabian Oil Co. at Jubail on Saudi Arabia's Persian Gulf coast will cost in excess of $10 billion to build.
That compares with an original price tag of $6 billion estimated in 2006.
The companies announced a final agreement to build the unit Wednesday, saying it should be ready by the end of 2012.
Speaking on the sidelines of the company's annual general meeting of shareholders, de Margerie told reporters the project would clearly cost in excess of $10 billion.
He declined to be more specific, noting that the companies plan to call a tender and he didn't want to "send a message to contractors" that might encourage them to inflate costs.
Oil services contracts have soared recently amid record oil prices and labor and materials bottlenecks.
Saudi Arabian Oil Co. and Total plan to release invitations to bid for the project's construction in June 2008 with a view to awarding all packages during the first quarter of 2009.
Total will own 37.5% of the Jubail refinery.
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