TOKYO - A JAPANESE oil refiner said on Wednesday that it was considering operating solar-power plants in Saudi Arabia, the world's top oil exporter, in cooperation with state-owned energy giant Saudi Aramco.

Showa Shell Sekiyu said it had agreed with Saudi Aramco, the world's biggest state-owned oil company, to 'explore the possibility of engaging in a small-scale electricity generation business using solar power'.

After initial studies, small pilot plants will be built by 2010 to test technologies, the Tokyo-based company said.

The firms will set up a joint venture to expand the business, possibly beyond the Middle East, if the plants prove commercially viable, it said.

Saudi Arabia has the world's largest proved reserves of crude oil but has also been looking to invest in solar power.

Japan, which has virtually no natural energy resources of its own, aims to take the lead in environmentally friendly energy.

Showa Shell said in May that solar power was one of the main pillars of its business strategy as domestic oil demand is falling due to the ageing population and efforts to reduce energy consumption.

Saudi Aramco has a 15 per cent stake in Showa Shell Sekiyu, Japan's fifth largest refiner which is 35 per cent owned by the Royal Dutch Shell group. -- AFP