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Dubai pens refinery deal with Sonangol

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A gas station in Dubai, 31 August 2005, the United Arab Emirates (AFP)

Dubai said on Thursday that it has signed a memorandum of understanding with China Sonangol to build a crude oil refinery aimed at meeting rising domestic demand.

The refinery, which will be the second in the Gulf emirate, will process end products for "domestic use as well as targeted international markets," the government of Dubai said in a statement.

"The refinery will seek to ensure the sustained supply of refined end products for the emirate???s future energy consumption while further augmenting Dubai???s export portfolio," it said.

The MoU was signed by Sheikh Ahmed bin Saeed al-Maktoum, chairman of Dubai Supreme Council of Energy, and Sonangol Group chairman Sam Pai.

The statement did not disclose details of the targeted capacity of the refinery, or the cost.

Although part of the oil-rich UAE federation, Dubai has very little oil reserves left, contrary to neighbouring Abu Dhabi.

Dubai has one gas condensate refinery, in Jebel Ali port, with an output capacity of 120,000 barrels per day.