Saudi Aramco is in advanced negotiations with China National Petroleum Corporation (CNPC) to build the Yunnan refinery in China, its chairman said.
Khalid Al-Falih, who is also Saudi Arabia's energy minister, said: "We hope to reach an agreement this year."
The minister added that he is optimistic on demand for oil.
Al-Falih said Saudi Arabia, the top crude exporter, does not target a specific figure for its oil production and that its output is based on customers' needs.
"We in the kingdom of Saudi Arabia do not have a targeted number to reach. The kingdom's production meets the requirements of the customers, whether they are outside or inside the kingdom," said Al-Falih.
"The kingdom's production policy will maintain a large degree of responsibility," he said.
Speaking during an official visit to China, Al-Falih said that despite low crude prices, "demand for oil does not worry me", adding that demand for crude in China remains "very healthy".
The Opec heavyweight started to increase production in June to meet a seasonal rise in domestic demand as well as higher export requirements. Industry sources said that Riyadh could boost production to a record in August.
Saudi Arabia produced 10.67 million barrels per day (bpd) of crude, the most in its history, in July. Al-Falih said that production in August had remained around that level, though he could not cite a specific number.
Saudi Arabia has a production capacity of 12.5 million bpd, giving it the ability to boost output in case of any global shortage.
Al-Falih said that production level was not expected to be reached unless there were unexpected outages.
"The market now is saturated with oversupply and we don't see in the short term a need for the kingdom to reach its maximum production capacity," he said.
The minister is part of an official Saudi visit headed by Deputy Crown Prince Mohammed bin Salman aimed at bolstering relations with China, a top energy customer and trade partner.