HOUSTON -- ConocoPhillips and the state-run Saudi Arabian Oil Co. said Tuesday they've revived plans to build a multibillion-dollar refinery in Saudi Arabia, citing improved economic conditions.

The companies signed a $6 billion agreement in 2006 to build the 400,000 barrel-a-day oil refinery in the kingdom's Red Sea city of Yanbu, but postponed those plans late last year as energy prices plunged.

Crude prices had been cut in half from July 2008 highs of $150 per barrel when the refinery plans were postponed in early November. Crude fell to lows around $30 by the end of the year. On Tuesday, benchmark crude closed at $69.89 a barrel in New York.

The project is in the bidding process, and the companies said invitations for bid notices have been issued to prequalified local and international contractors. The major work includes a variety of refining equipment, a tank farm, off-site pipelines and high- voltage electrical units.

The project's startup is targeted for the third quarter of 2014.

"Market improvements have provided a good opportunity to reactivate the bidding process," Khalid G. Al-Buainain, Saudi Aramco's senior vice president for refining and marketing, said.

The joint venture said the refinery will process Arabian heavy crude supplied by Aramco and produce high-quality, ultra-low sulfur refined products.

The project's resumption comes even as global energy demand remains weak, and refiners struggle with low margins. Valero Energy Corp., the largest U.S. independent oil refiner, said earlier this month it expects to post a second-quarter loss.

In May, ConocoPhillips Chairman Jim Mulva acknowledged that the economic downturn was the most difficult period in his 36 years with the Houston-based oil giant. ConocoPhillips has cut 1,300 jobs this year and reduced its 2009 capital spending budget by 37 percent.

Shares of ConocoPhillips fell 15 cents Tuesday to close at $42.06. SUBHEAD: ConocoPhillips and Aramco cite better economic conditions for the project.

Originally published by JOHN PORRETTO Associated Press.

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