Oil giant ConocoPhillips said it pulled out of a project to build a new refinery with Saudi Aramco in Saudi Arabia, citing its strategy to reduce its refinery operations.

The planned refinery was to be built by the two oil companies in Yanbu Industrial City and have a processing capacity of 400,000 barrels per day.

Conoco, like other major oil refiners, has seen profits shrink at the plants that turn crude oil into gasoline and diesel fuel as the global economic slowdown has eroded demand.

'We ultimately decided this project was not consistent with our current strategy to reduce our downstream footprint,' Willie Chiang, senior vice president for refining, marketing and transportation, said in a statement.

Last week, Conoco sold its stake in a Canadian oil sands project to China's Sinopec for $4.65 billion as part of its program to sell $10 billion in assets to help reduce its heavy debt burden.

Meanwhile Saudi Aramco has confirmed that it had received a formal written notice from ConocoPhillips of its withdrawal from the new Yanbu export refinery project.

Khalid G. Al-Buainain, senior vice president of Refining, Marketing and International in Saudi Aramco, said the Yanbu’ Export Refinery was a full-conversion refinery designed to process Arabian heavy crude.

'It will produce high-quality, ultra-low sulfur refined products, including about 265,000 bpd of diesel and 90,000 bpd of gasoline. These products will meet the strictest international specifications, and can be sold globally to the highest valued markets,' he added.-Reuters and TradeArabia News Service