Saudi Aramco and Saudi Basic Industries Corp (Sabic) are considering a new joint refinery in Yanbu on the Red Sea coast of Saudi Arabia to produce chemical products from crude oil, a report said.

“This move is long overdue given that both companies are operating and competing in the same markets,” said Mohamed Ramady, a London-based energy analyst, was quoted as saying in the Bloomberg report.

“Sabic and Aramco cooperation will ensure that both companies will avoid duplication of projects in this period of Saudi economic rationalization and cost effectiveness.”

Saudi Aramco and Sabic had been working separately on projects to produce chemicals directly from crude oil without the need to have separate refineries, Bloomberg quoted sources.

Aramco’s chief executive officer Amin Nasser recently announced that the company is testing the new technology to produce chemicals from crude oil, the report said.