Saudi Aramco, Conoco Phillips to Build Refinery in Saudi Arabia

The refinery, which will start up in 2013, will be able to process 400,000 barrels of oil per day to process heavy crude supplied by state-owned Saudi Aramco, the companies said in a statement.

Each firm will be responsible for marketing one half of the production. They are planning to form a joint-venture to own and operate the refinery, which will be located in Yanbu Industrial City. They may also offer a portion of the company to the Saudi public.

In May of this year, the companies agreed to an initial evaluation, front end engineering and design for the project.

The next phase of the project involves soliciting bids, commitment of long lead items and site preparations work, they said.

"This partnership is important to Saudi Aramco, and this initiative is an important aspect of our company's expanding downstream business portfolio," said Khalid G. Al-Buainain, Saudi Aramco senior vice president for Refining Marketting & International.

"The Yanbu project fits well with the company's overall strategy to invest in projects that expand our global refining presence and provide significant new supplies of clean products in an environmentally sound manner," said ConocoPhillips executive vice president of refining Jim Gallogly.

Shares of ConocoPhillips rose $2.71, or 3.03 percent to $92.02 in late trading on the New York Stock Exchange.