Total signs Saudi refinery deal

Total hopes the deal will strengthen its ties with Saudi Arabia

French oil firm Total has signed a deal with Saudi Arabia to build an oil refinery, at an estimated cost of $6bn.

The refinery, to be built in Jubail on the Gulf coast, will process 400,000 barrels of crude a day and is expected to be up and running by 2011.

Under the deal, Total and state oil firm Saudi Aramco will form a joint venture firm with each holding a 35% stake in the new company.

The remaining shares will be offered to the Saudi public at a future date.

Stronger links

"This proposed project represents an excellent opportunity to build on the Kingdom's strategy of addressing global energy demand while attracting foreign investment to expand its economy," said Aramco chief Abdallah Jumah.

Total added that the agreement would strengthen its ties with the kingdom.

Saudi Aramco will supply the project with 400,000 barrels a day of oil, while Saudi Aramco and Total will share the marketing of the refinery production, a joint press release said.

The deal for the export refinery is the first of two such joint venture refineries planned by Saudi, the world's leading oil exporter.

Aramco officials have said they hope to agree a deal with ConocoPhillips by the end of the month to build a similar plant in Yanbu.

Oil prices have surged to record levels above $73 earlier this month amid surging demand and fears over supplies.