(Adds Lyondell no comment, details and background)
By Erwin Seba and Jessica Resnick-Ault
HOUSTON/NEW YORK, Sept 5 (Reuters) - Saudi Aramco
An announcement of the sale by Lyondell is expected thisweek, the sources said.
Lyondell spokesman Michael Waldron declined on Monday todiscuss a sale of the refinery.
Reuters reported on Aug. 25 that Dutch chemical companyLyondell had retained Bank of America Merrill Lynch tohelp with a sale of the refinery.
A company spokeswoman said in August, "the refinery may bemore valuable as part of a larger refining system. We areexploring all options."
Lyondell uses the Houston refinery to produce feedstocks forits chemical plants. The refinery can run a variety of cheaperhigh-sulfur crude oils. In the past few years it has beenrunning a large amount of Canadian oil.
The 263,776 barrel per day (bpd) Houston refinery wasrestoring production on Monday after an early Thursday morningpower outage, the latest in a string of fires, shutdowns andpower outages that have cut the plant's production throughoutyear.
Saudi Aramco-Motiva emerged as the leading contender overthe weekend, when Lyondell's management evaluated proposals frompotential buyers, the sources said.
Aramco-Motiva and Canada's Suncor Energy Inc wereexchanging proposals with Lyondell in the past few days,according to the sources.
Little was heard about another potential buyer, ValeroEnergy Corp, the sources said.
Saudi Aramco, Motiva, Suncor and Valero did not reply tomessages seeking comment.
The refinery has been valued at about $1.5 billion based onan average price between $5,000 and $6,000 per barrel ofrefining capacity in recent sales of U.S. refineries.
The Lyondell refinery is well known to Saudi Aramco'spartner in Motiva, Royal Dutch Shell Plc.
Lyondell's refinery supplies dry gas to Shell'sjoint-venture refinery seven miles (11.25 km) east in Deer Park,Texas. Aramco and Shell announced plans in March to divideMotiva's three refineries, distribution terminals and retailnetworks between them. Aramco is to keep the Motiva name.
It was unclear if the Lyondell refinery will remain with thepost-breakup Motiva once the split takes place on April 1, 2017.
Negotiations on the final distribution of assets after thebreakup were continuing as of last week, according to Motiva.
(Reporting by Erwin Seba in Houston and Jessica Resnick-Ault inNew York, editing by G Crosse and Tom Brown)
