The deal finalised an initial agreement signed last year. It should cost around US$10 billion including debt, Aramco president and CEO Khalid al-Falih said.
Operational in 2014
The project, named Yasref, aims to be operational in 2014. Saudi Aramco will hold a 62.5 per cent stake with Sinopec holding the rest
The deal "represents a strategic partnership in the refining industry between one of the main energy producers in Saudi Arabia and one of the world's most important consumers," said Falih.
The refinery, which will process 400,000 barrels of heavy crude a day, will create 1,200 direct jobs and more than 5,000 indirect jobs. Saudi Aramco's refining capacity will reach 8mn barrels a day over the next decade, with most additional capacity planned in China, al-Falih added.
The project is the fourth venture between Saudi Aramco and Sinopec.