NEW YORK (Reuters) - Saudi Aramco and ConocoPhillips said they would proceed with plans to build a 400,000 barrel-per-day refinery in Yanbu, Saudi Arabia, even as costs for new refining facilities soar.

The plant is one of four that the world’s top oil exporter aims to build to boost domestic refining capacity by as much as 1.6 million barrels per day from 2.1 million.
The companies did not disclose an estimated cost for the Yanbu project, which was originally pegged at about $6 billion when it was announced in 2006.
But French oil company Total is building a similar refinery on Saudi Arabia’s Persian Gulf coast, and Chief Executive Christophe de Margerie said earlier on Friday that he expected that project to cost more than $10 billion.
Equipment and labor shortages have pushed costs up globally in the energy sector, raising industry concerns about whether the new Saudi plants would be built.
According to a recent study by Cambridge Energy Research Associates, costs to build refineries around the world have risen 76 percent since 2000.
Conoco and Saudi Aramco said they had completed initial evaluation and front-end engineering and design. The next phase will include bid solicitation and site preparation work.
The Yanbu refinery is targeted to start in 2013, the companies said. It will process heavy crude supplied by Saudi Aramco.
The companies will hold equal shares of the joint venture that will own and operate the plant, and they plan to offer a stake in the refinery to the Saudi public. Conoco and Aramco would each be responsible for marketing one half of the refinery’s production.