Refining

In the 1960s, Saudi Arabia began to build refineries for domestic and export production. Prior to that, the Kingdom had to send its crude oil to foreign refineries for processing and import refined products for its own use. The country rapidly expanded its refining capacity under the development plans in the 1970s. Today, the Kingdom's refineries are ranked among the world's most technologically advanced. Production of petroleum products at these refineries rose from only 616,000 barrels per day in 1970 to around 8 million barrels per day thirty years later. These products include gasoline, fuel and diesel oil, liquefied petroleum gas (LPG), jet fuel, kerosene, and asphalt.

Saudi Arabia's oil policy also emphasizes expanding its downstream operations abroad. As a first step, Saudi Aramco and Texaco Inc. established a joint-venture company, Star Enterprise, to refine and market petroleum products in the United States. The company, which began operation on January 1, 1989, owned around 10,000 gasoline stations and a number of distribution centers in 26 states in the eastern U.S. It also owned and operated three refineries with a combined capacity of over 600,000 barrels per day. Star Enterprise was dissolved in 1997, and its assets amalgamated into a new three-way joint venture with Texaco Incorporated and Shell Oil Company to form one of the largest refining and marketing networks in the United States.

Saudi Aramco entered into another joint venture operation with Ssang Yong Company of South Korea for the refining and marketing of petroleum products in South Korea and Southeast Asia. Under the agreement, Saudi Aramco became joint owner of two refineries with a capacity of 260,000 barrels per day and part owner of other refining, marketing and distribution facilities. The second phase, inaugurated in April 1997, upgraded the capacity to more than 500,000.

In January 1994, Saudi Aramco purchased 40 percent of Petron, the largest refiner and distributor of petroleum products in the Philippines. In April 1996, Aramco took a fifty percent interest in the Vardinoyannis Group of Greece, which refines and distributes Avin Oil in Europe. Later in 1996, Aramco negotiated a stake in an oil refinery in the Punjab, in a joint venture with the Hindustan Petroleum Company of India, and in June 1997 announced a joint venture with Sinopec of China.

The expansion of Saudi oil refineries and joint venture agreements for the refining and distribution of petroleum products abroad are part of the Kingdom's strategy to diversify and expand its oil industry.