Saudi Aramco, PetroChina to build 0.2m barrel-a-day refinery

Saudi Aramco and China National Petroleum Corp agreed to build a 200,000 barrel-a-day refinery in southern China as producers seek to meet rising fuel demand in the world's fastest-growing major economy. The state-owned oil company of Saudi Arabia signed a memorandum of understanding March 17 with CNPC unit PetroChina to build the facility in China's Yunnan province, Aramco said in a statement on its website Sunday. The company is participating in refinery and oil-storage projects in Asia to improve access to markets there amid the region's increasing consumption of fuel and crude. The announcement follows a separate agreement Aramco reached last week with China Petroleum and Chemical Corp., known as Sinopec, for construction of a fuel-processing plant at Yanbu on the Kingdom's Red Sea coast. Aramco is expanding refining capacity at home to satisfy demand for gasoline and other products in Saudi Arabia. The planned 200,000 barrel-a-day refinery in Yunnan will process Arabian crude into products including low-sulfur gasoline and diesel, Aramco said in the statement. Aramco will supply the refinery with crude through a long-term contract, and PetroChina will market the refined products. "This agreement is a significant step forward in our expanding relationship with CNPC and in our global downstream strategy," Aramco Chief Executive Officer Khalid Al-Falih said in the statement. "We don't consider ourselves simply sellers of oil to China, but rather strategic partners whose many relationships in that important country are founded on mutual respect, interdependence and mutual benefit." In a parallel effort, Aramco aims to integrate fuel processing with petrochemicals at its domestic refineries. The company is building a joint-venture refinery at Jubail on the Persian Gulf and another at Jazan in southwestern Saudi Arabia. The Jubail venture with Total SA is set for completion in 2013, with the Yanbu refinery following in 2014 and Jazan one year later, Khalid Al-Buainain, Aramco's senior vice president for downstream, said in Houston March 8.