Saudi Refining, a wholly owned subsidiary of Saudi Aramco, and SOPC Holdings East, a US downstream subsidiary of Shell, have signed a binding definitive agreement on the separation of assets, liabilities and businesses of Motiva Enterprises.
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Equally owned by affiliates of Saudi Aramco and Shell, Motiva Enterprises refines, distributes and markets petroleum products in the US.
The transaction is subject to regulatory approvals and expected to close by the second quarter of this year.
Saudi Aramco senior vice president of downstream Abdulaziz Al-Judaimi said: “This transaction is well aligned with Aramco's global downstream strategy. Motiva is a strong competitor among US refiners, and we value this important link with the dynamic US energy sector.
“Our intent is to continue providing Motiva with strong financial support as it transitions into a stand-alone downstream affiliate.
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By GlobalData“We have a long history with the Motiva team, and we're proud of the impressive strides they have made in recent years toward building on the company's core strengths.”
Shell downstream director John Abbott said: “A simplified, integrated business structure will emerge from this deal for us in the United States and that's consistent with the stated goal of making Shell a world-class investment opportunity.
“We have today created a set of assets that plays to our strengths. This portfolio upgrade will increase optionality and strengthen Shell's Downstream business.”
The termination of the joint venture will enable both companies to focus on their own downstream business.
Under a non-binding letter of intent signed in March last year, both the companies have evaluated options and through negotiations selected an optimal deal structure to divide and transfer Motiva Enterprises’s assets, liabilities and businesses between the companies.
According to the negotiated transaction, Saudi Refining will receive full ownership of the Motiva Enterprises’ name and legal entity, including the refinery at Port Arthur in Texas and 24 distribution terminals.
Motiva will also receive the right to sell Shell-branded petrol and diesel exclusively in the states of Georgia, North Carolina, South Carolina, Virginia, Maryland and Washington, DC, in addition to the eastern half of Texas and the majority of Florida.
Shell will assume full ownership of both the Norco and Convent refineries located in Louisiana, along with 11 distribution terminals.
Shell also operates a chemical plant in the Norco refinery.
Shell will also assume the sole ownership of its branded markets in Alabama, Mississippi, Tennessee, Louisiana, a portion of the Florida panhandle, and the north-eastern region of the US.
These assets will be integrated with the downstream business of Shell in North America.
Image: Norco chemicals complex in Louisiana. Photo: courtesy of Shell / Flickr.
