Saudi Aramco to pay Shell US$2.2bil in refinery breakup

Royal Dutch Shell and Saudi Aramco have finalized the agreement to split the assets, liabilities and businesses of their 50/50 refining and marketing joint venture in the U.S., Motiva Enterprises, targeting transaction closure in the second quarter this year, the Anglo-Dutch oil major and the Saudi oil giant said in separate statements.

As part of these efforts, USA -listed Rowan Companies and Nabors Industries are among companies that announced plans to boost manufacturing in Saudi Arabia in joint ventures with Saudi Aramco.

A balancing payment of $2.2 billion has been agreed between the parties, subject to adjustments including for working capital.

Aramco will take on $1.5 billion of Shell's $1.6 billion share of Motiva's net debt and pay $700 million in cash. A cash payment will cover the balance, Shell said. "We view this transaction as a positive outcome of the strong and historic business of Saudi Aramco in the USA." said Amin Nasser, President and chief executive.

Shell and Saudi Aramco, as the oil explorer is known, agreed past year to end the Motiva venture, which oversaw the three oil refineries, as well as fuel terminals and fuel-branding rights in multiple USA states.

The Saudis will maintain the rights to the Motiva Enterprises brand, as well as 24 distribution terminals, including exclusive rights to sell Shell-branded gasoline in eastern Texas, Georgia, North Carolina, South Carolina, Virginia, Maryland, Washington D.C. and most of Floria. Shell will also own 11 distribution terminals, Shell-branded markets in Alabama, Mississippi, Tennessee, Louisiana, a portion of the Florida panhandle, and the North-eastern region of the U.S. Shell will integrate these assets with its downstream business in North America.

The 600,000 barrel-a-day Port Arthur refinery suffered leaks and fires that delayed a US$10bil expansion to double the size of the plant.

  • Zachary Reyes