The two oil firms will form a project company to develop the 400,000-barrel-a-day facility, which is expected to have an overall cost of more than $12bn.
The refinery is designed to process Arabian heavy crude which would be supplied by Aramco. It will produce high-quality, ultra-low sulphur refined products.
Aramco and Conoco will each be responsible for marketing one half of the refinery’s production when it comes onstream in 2013.
Tenders for the main process packages will be issued to prequalifed contractors soon, with a view to awarding the work late this year or early 2009.
Rising engineering, procurement and construction costs had put the project in doubt, especially after Conoco pulled out of the Fujairah refinery scheme last year citing the increased price tag.
As it stands, the Yanbu scheme will cost at least double the original $6bn budget.
The Yanbu project approval comes just days after Aramco and France’s Total announced there intention to proceed with the kingdom’s the other export refinery, at Jubail (MEED 9:05:08).