Aramco said in a statement it has agreed in a memorandum of understanding with Sinopec to initially hold a 62.5-percent stake in the Red Sea Refining Company formed to develop the refinery in Yanbu, on the Kingdom's Red Sea coast.
Sinopec, Asia's largest refiner, would own the remaining stake should both partners "proceed to formally participate in a joint venture", Aramco said.
The refinery was to have been built by US oil firm ConocoPhillips and Aramco. But Conoco pulled out of the plans in April 2010.
Yanbu accounts for just under a quarter of Saudi plans to add around 1.7 million bpd of refining capacity to the current 2.1 million bpd.
Aramco has said it will push on with the project even after ConocoPhillips withdrew and awarded in July deals to build the refinery.
The refinery is slated to process heavy crude from Saudi Arabia's project to pump 900,000 barrels per day from the Manifa oil field.
It is a sister project to another 400,000-bpd refinery Aramco is building with France's Total at Jubail on Saudi Arabia's Gulf coast.
The Yanbu refinery is expected to start operations in 2014.
Sino-Saudi trade ties have grown as Chinese economic growth has boosted its fuel consumption and increased its reliance on the Kingdom's crude.
Aramco has already partnered with Sinopec at the joint venture Fujian plant in southeast China.
Sinopec signed on Wednesday a joint venture deal with state-run Kuwait Petroleum Corp. (KPC) worth around $9 billion to build an oil refinery and petrochemical plant in southern China.
