Saudis plan new export refinery

State-run Saudi Aramco - responsible for 95% of Saudi oil production - has unveiled plans to build a new export -driven refinery on the Red Sea.

The facility at Yanbu would have a 400,000-barrel-per-day (bpd) capacity, and cost $4bn-$5bn (£2.13bn-£2.66bn).

The new refinery will serve world gasoline markets, easing pressure on overstretched refineries elsewhere.

Saudi Aramco wants to form a joint venture with one or more international partners for the site.

'Global talks'

The refinery could supply high-quality gasoline to the US, low-sulphur diesel to Europe and naphtha to East Asia, Saudi Aramco vice president Khalid al-Buainai said on Tuesday.

The firm wants to find two overseas partners, who would have a total 30% share in the new plant.

Five westerners were killed in the Yanbu attack last year

"We are talking across the globe to all refiners," he said, adding that deals should be sealed within the next 12 months.

Hindustan Petroleum of India has held "preliminary talks" for a stake, HPCL Chairman MB Lal told Reuters news agency.

In May 2004, gunmen attacked the offices of overseas energy firms based in Yanbu, killing five Westerners. The attack was seen as an attempt to target the oil industry and scare foreigners into leaving the country.

Security forces pursued and shot dead all four attackers, who had fled the scene.

Oil rises

The news comes a few days after oil prices reached new record highs of $58.28 and investment bank Goldman Sachs warned the price of a barrel would eventually top $100.

World global output of oil is struggling to match rising demand in the US and in growing economies such as China.

At the same time, political and security uncertainties continue to affect output from countries such as Nigeria and Iraq.

Oil producers' cartel, Opec, has started talks about raising output by 500,000 barrels a day.

Also on Tuesday, Federal Reserve chairman Alan Greenspan said market forces could eventually lead to a big enough increase in crude oil inventories to cool the recent oil price "frenzy".

Mr Greenspan said recent record high oil prices had slowed oil demand growth, although "only modestly."