"We ultimately decided this project was not consistent with Conoco's current strategy to reduce our downstream footprint," Willie Chiang, senior vice president for refining, marketing and transportation, said in a written statement to journalists.
Saudi Aramco confirmed that it had received a formal written notice from ConocoPhillips of its withdrawal from the Yanbu export refinery project.
According to Khalid Al-Buainain, senior vice president of refining and marketing at Saudi Aramco, the Yanbu project is a full-conversion refinery designed to process Arabian heavy crude.
"It will produce high-quality, ultra-low sulfur refined products, including about 265,000 barrels per day of diesel and 90,000 barrels per day of gasoline. These products will meet the strictest international specifications, and can be sold globally to the highest valued markets," said Al-Buainain.
Saudi Aramco has in recent months switched its development focus to refining, petrochemicals and gas after boosting its oil production capacity to 12.5 million barrels per day last year.
Al-Buainain said: "The Yanbu project is expected to generate strong returns due to attractive capital costs, a best in class operating cost structure, and an ideal location for serving local and global markets. Having these advantages, plus the highest quality of finished products, we anticipate that the Yanbu export refinery will become one of the most competitive refineries in the world."
Conoco, like other major oil refiners worldwide, has seen profits shrink at its plants that turn crude oil into gasoline and diesel fuel as the global economic slowdown has eroded demand.
Last week, Conoco sold its stake in a Canadian oil sands project to Sinopec for $4.65 billion as part of its program to sell $10 billion in assets to help reduce its heavy debt burden.
Saudi Aramco is investing in oil-processing capacity even as returns from refining have diminished, Chief Executive Officer Khalid Al-Falih said in January. Aramco plans to invest more than $120 billion in the next six years on crude oil and petrochemical projects, Al-Falih was quoted as saying.
Saudi Aramco is a fully-integrated, global petroleum enterprise, and a world leader in exploration and producing, refining, distribution, shipping and marketing. The company manages proven conventional reserves of 260 billion barrels of oil, the largest of any company in the world, and manages the fourth-largest gas reserves in the world at 263 trillion cubic feet.
In addition to its headquarters here in Dhahran, Saudi Aramco has affiliates, joint ventures and subsidiary offices in India, China, Japan, the Netherlands, the Republic of Korea, Singapore, the United Arab Emirates, the United Kingdom and the United States.