KHOBAR: Saudi Aramco said Wednesday it signed an initial agreement with China Petrochemical Corp., or Sinopec Group, to jointly develop the 400,000 barrels-per-day (bpd) Yanbu refinery project. Aramco said in a statement it has agreed in a memorandum of understanding with Sinopec to initially hold a 62.5 percent stake in the Red Sea Refining Company formed to develop the refinery in Yanbu. Sinopec will initially hold a 37.5 percent stake and Saudi Aramco will have a 62.5 percent stake in the project should they proceed to formally participate in a joint venture, which will start operation in 2014, Aramco said in a statement posted on its website. Sinopec Group is Asia's biggest oil refiner by capacity and the parent of Hong Kong-listed China Petroleum & Chemical Corp., also known as Sinopec. Sinopec, Asia's largest refiner, would own the remaining stake should both partners “proceed to formally participate in a joint venture”, Aramco said. The refinery was to have been built by US oil firm ConocoPhillips and Aramco. But Conoco pulled out of the plans in April 2010. Yanbu accounts for just under a quarter of Saudi plans to add around 1.7 million bpd of refining capacity to the current 2.1 million bpd. Aramco has said it will push on with the project even after ConocoPhillips pulled out of the refinery project last year as it decided to cut back on refining and marketing activities. The refinery is slated to process heavy crude from Saudi Arabia's project to pump 900,000 barrels per day from the Manifa oilfield. It is a sister project to another 400,000 bpd refinery Saudi Aramco is building with France's Total at Jubail on the Kingdom's Gulf coast. Sino-Saudi trade ties have grown as Chinese economic growth has boosted its fuel consumption and increased its reliance on the Kingdom's crude. Saudi Aramco has already partnered with Sinopec at the joint venture Fujian plant in southeast China. Sinopec signed Wednesday a joint venture deal with state-run Kuwait Petroleum Corp (KPC) worth around $9 billion to build an oil refinery and petrochemical plant in southern China.
