HOUSTON, March 16, 2016 /CNW/ -- Saudi Arabian Oil Company ("Saudi Aramco") through its wholly owned Saudi Refining Inc. ("SRI") subsidiary and Royal Dutch Shell plc ("Shell"), through its U.S. downstream affiliate, announce today they have signed a non-binding Letter of Intent to divide the assets of Motiva Enterprises LLC. The Motiva joint venture was formed in 1998 and has operated as a 50/50 refining and marketing joint venture between the parties since 2002.
In the proposed division of assets, SRI will retain the Motiva name, assume sole ownership of the Port Arthur, Texas refinery, retain 26 distribution terminals, and have an exclusive license to use the Shell brand for gasoline and diesel sales in Texas, the majority of the Mississippi Valley, the Southeast and Mid-Atlantic markets. Shell will assume sole ownership of the Norco, Louisiana refinery (where Shell operates a chemicals plant), the Convent, Louisiana refinery, nine distribution terminals, and Shell branded markets in Florida, Louisiana and the Northeastern region.
"Motiva's performance has been transformed in the last two years. We propose to combine the assets we will retain from the joint venture with Shell's other Downstream assets in North America. This is consistent with both the Group and Downstream strategy to provide simpler and more highly integrated businesses which deliver increased cash and returns," said John Abbott, Shell Downstream Director.
Abdulrahman F. Al-Wuhaib, Senior Vice President of Downstream, Saudi Aramco said: "Saudi Aramco subsidiaries and affiliates have had a presence in the U.S. for over 60 years, and the Motiva joint venture with Shell has served our downstream business objectives very well for many years. However, it is now time for the partners to pursue their independent downstream goals. The Port Arthur refinery will advance Saudi Aramco's global downstream integration strategy through supply & trading, refining and fuels marketing, chemicals and base oils. Motiva's employees will continue to be critical to fulfilling our future growth potential in the Americas, reinforcing our reliable customer service and supporting the communities where we operate. We fully support Motiva's continuing transformation journey to become an autonomous integrated downstream affiliate."
Dan Romasko, Motiva President and CEO, said: "Motiva has benefited greatly from the nearly two decades of support and resources provided by Shell and Saudi Aramco. While the parties work towards definitive agreements, Motiva will remain focused on our growth agenda, running operations in a safe, environmentally sound and efficient manner while continuing to reliably serve our customers."
Both Motiva shareholders are committed to supporting the venture during this period of transition and assuring excellent customer service and continued health, safety and environmental performance. During the period of transition, shareholder financing support arrangements for Motiva remain in place and both shareholders are committed to maintaining Motiva's balance sheet strength and liquidity.
Under the terms of the LOI, the partners will evaluate options and select an optimal deal structure with the objective of formalizing a definitive agreement to divide and transfer Motiva Enterprises LLC's assets, liabilities and employees between the companies. The companies will make a further joint announcement in due course.
Notes to the Editor:
- Cooperation between the companies also includes: Saudi Aramco Shell Refinery Co. (SASREF) - a 50:50 joint venture refining enterprise at Jubail Industrial City in Saudi Arabia with a crude oil refining capacity of 305,000 bpd. Shell and Saudi Aramco also have a multiyear relationship in the Showa JV in Japan. Shell recently reached an agreement to sell shares representing a 33.24% shareholding in Showa to Idemitsu Kosan. Shell will retain a 1.80% holding in the company after completion later this year.
- The refining assets from Motiva which will be owned and operated by Shell include the 230,000 barrel per day Convent refinery located in St. James Parish, Louisiana and the 235,000 barrel per day Norco refinery located in St. Charles Parish, Louisiana.
- The refining asset from Motiva which will be owned and operated by Saudi Aramco is the 600,000 barrel per day Port Arthur refinery located in Port Arthur, Texas.
- Distribution terminals, retail assets, branded and commercial customer agreements will be divided by geography in a way to ensure each partner has an integrated and robust business.
- SRI will have exclusive use of the Shell brand through a long-term license agreement in its area of operation.
About Saudi Aramco
- Saudi Aramco is a world leader in integrated energy and chemicals. We are driven by the core belief that energy is opportunity. From producing approximately one in every eight barrels of the world's crude oil supply to developing new energy technologies, our global team is dedicated to creating positive impact in all that we do. We focus on making our resources more sustainable and more useful. This promotes long-term economic growth and prosperity around the world.
- Royal Dutch Shell plc, a global group of energy and petrochemical companies with operations in more than 70 countries. In the U.S., Shell operates in 50 states and employs more than 20,000 people.
About Motiva Enterprises LLC
- Headquartered in Houston, Texas, Motiva Enterprises LLC refines, distributes and markets petroleum products. With three refineries in the U.S. Gulf Coast region, Motiva has a combined capacity of over 1.1 million barrels per day. The company's marketing operations support a network of approximately 8,300 Shell-branded gasoline stations in the eastern and southern United States. Motiva is owned equally by affiliates of Saudi Aramco and Shell Oil Company.
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Saudi Aramco Media Relations
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Saudi Refining Media Relations: +1 713 432 4190
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Motiva Media Relations
+1 713 427 3424
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SOURCE Royal Dutch Shell plc