Saturday, Jan 14, 2012
DHAHRAN , Saudi Arabia (Dow Jones)--State-giant Saudi Arabian Oil Co., or Aramco, Saturday signed a deal with China Petrochemical Corp. (SNP), or Sinopec Group, to develop a 400,000-barrel-a-day oil refinery at Yanbu, on the Saudi Red Sea coast.
Sinopec Group will hold a 37.5% stake in the project, known as Yasref, while Saudi Aramco will own 62.5%. The refinery is due to start operations in 2014. Sinopec Group is Asia's biggest oil refiner by capacity.
U.S. oil major ConocoPhillips (COP) last year pulled out of the Yanbu project after deciding to cut back on refining and marketing activities.
The Aramco-Sinopec deal marks the latest effort by China and Saudi Arabia to strengthen energy ties.
Last year, Aramco agreed an initial deal with PetroChina Co. (PTR) to supply crude oil to a new refinery in southwest China, in a move that will help cement Saudi Arabia's position as China's top crude supplier.
China surpassed the U.S. as the biggest importer of oil from Saudi Arabia in 2009, and the kingdom's crude is an increasingly important factor in powering the nation's growth.
Energy demand is rising rapidly in China, driven by rapid industrialization and a growing middle class.
Saudi Arabia shipped nearly 45.5 million tons of crude to China between January to November last year, up from 44.6 million tons in 2010, according to data from China's General Administration of Customs.
Significant volumes are shipped to a Sinopec-operated joint venture refinery in southern China's Fujian province, in which Aramco has a near-25% stake.
-By Summer Said, Dow Jones Newswires; +966-546-842373; summer.said@dowjones.com
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
14-01-12 0757GMT
