Al KHOBAR: Saudi Aramco and Japan's Sumitomo Chemical have issued letters of intent to at least two contractors who submitted the lowest bids to expand a petrochemical complex in Saudi Arabia, moving a step closer to a decision on whether to proceed with the major project, industry sources said.

British company Petrofac and South Korea's GS Engineering and Construction were picked among contractors to be part of building the second phase of the already operational complex in Rabigh on the Red Sea coast of the world's largest oil exporter.

The Rabigh 2 project is part of state-run Saudi Aramco's plans to become an energy firm focusing on chemicals, unconventional gas and renewables, to diversify its business from oil alone.

Petrofac leads the race for the two packages that involve a tank farm and common utilities.

GS Engineering and Construction is frontrunner for two process packages known as CP3 and CP4.

GS is also the lowest bidder on a utilities package for interconnecting.

The letters were issued last week as the validity of bids was due to expire on April 30, sources said.

Aramco's chief executive Khalid Al Falih had earlier said the estimated total budget cost of the expansion was $6 bilion to $8 billion, but one source with knowledge of the bidding said it would now be much lower because of fierce competition.