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The company, Saudi Aramco, aims to strengthen its position on the Gulf of Mexico coast by buying a large oil refinery in the Houston Ship Channel that LyondellBasell is putting up for sale.

And despite geopolitical tensions between Riyadh and Washington, Saudi Aramco sees the potential acquisition as a way to shore up its exports at a time of erosion in the oil business on which the Saudi economy is still largely reliant. Because of plunging prices, the value of Saudi oil sales has shrunk in recent years. And Saudi Arabia's archrival, Iran, is becoming a more potent commercial competitor now that it is exporting substantial quantities of crude.

Four years ago Saudi Aramco completed a $10 billion expansion of a giant oil refinery in Port Arthur, Texas, in a joint venture with Royal Dutch Shell called Motiva Enterprises. The converted plant is now the biggest producer of gasoline, diesel and other petroleum products in the United States.

This time, Saudi Aramco wants to do a deal on its own. But its negotiations with LyondellBasell, a Dutch company, come as Congress is moving to allow families of victims of the Sept. 11, 2001, terrorist attacks to sue Saudi Arabia for supposed ties between government officials and the terrorists, most of whom were Saudi citizens. The Obama administration has threatened to veto the measure, although an override is possible.

Saudi officials have denied any role in the attacks and have threatened to sell $750 billion in U.S. assets, including Treasury securities, held by the Saudi government if the congressional measure moves forward.
But energy experts say the quiet bid by Saudi Aramco is designed to further protect its share of the U.S. oil market, even as Washington and U.S. oil companies continue efforts to wean the country off foreign oil.
Neither Saudi Aramco nor LyondellBasell responded to questions about the bidding.

Saudi Aramco is in competition for the Lyondell refinery with Texas-based Valero, as well as two big Canadian companies, Suncor and Cenovus. Energy experts who have been briefed on the negotiations say that Saudi Aramco is a leading contender and that the price for the refinery could be as much as $1.5 billion.

The Lyondell plant has a capacity to refine nearly 270,000 barrels a day of crude, which could increase Saudi Aramco's capacity to refine its oil on the Gulf Coast by about 50 percent. The refinery ...