According to the confidential documents reviewed by Svergies Radio (SR) the project was launched in 2007 and contains plans to build 35 buildings.
SR claimed as well that the Swedish government had knowledge of the project, referred to in the documents as Simoom.
FOI head Jan-Olof Linde, however, denied the report, and stated repeatedly that such a plan does not exist.
“Today we have no ongoing projects with that country, so I have no comments because we don't have any project,” Linde said to SR.
When probed further, Linde remained staunch.
“The answer is no. Really! Don't you hear what I'm saying,” he told SR.
Jan Erik Lövgren of the Swedish Agency for Non-Proliferation and Export Controls (ISP), stated however that the FOI still has plans involving Saudi Arabia.
“I understand that there is some form of dialogue with the Saudis,” he said.
Dick Sträng, who led the project until 2010, also said the information was correct and that the government had complete knowledge of the project.
According to the documents reviewed by SR, it is clear that FOI was to take the lead on the construction of the plant with the help of several Swedish companies.
In early 2008, the government didn't want FOI to have responsibility for the construction because of the sensitivity of the matter.
But the Saudis still wanted FOI, rather than a private company, to lead the work, and felt deceived by the attempt to take FOI off the project.
In an attempt to resolve the situation, FOI created a company, Swedish Security Technology and Innovation (SSTI), what was meant to serve as a front company for dealings with the Saudis and was represented by the same people who had previously led the project.
On paper, SSTI is a private company without any ties to public agencies in Sweden and thus didn't need to seek approval from the government.
The radio station claimed that the secret government documents stated that the project “pushes the boundaries of what is possible for a Swedish agency," according to SR.
Prime minister Fredrik Reinfeldt commented on the report during a press conference on Tuesday morning.
"We've had an agreement with Saudi Arabia since 2005, and we have a system in Sweden whereby we continue to abide by such agreements when a government changes," Reinfeldt told reporters.
"The government is responsible for ensuring that all the laws and regulations are in place and are followed and I am operating under the assumption that the responsible agencies have abided by the law."
Reinfelt refused, however, to comment on any details of the report, citing that most of the related material is classified.
Meanwhile, Green Party spokesperson Gustav Fridolin issued a statement announcing his party was reporting defence minister Sten Tolgfors to the Riksdag's committee on the constitution (Konstitutionsutskottet – KU).
"The committee on the constitution needs to examine whether the defence minister's actions are in line with Sweden's democratic priniciples and Sweden's stance on human rights," said Fridolin.
According to Fridolin, Sweden's cooperation with Saudi Arabia is neither good for democratic development nor for Swedish interests.
"Sweden shouldn't ruin its good reputation by supporting military dictatorships," he said.