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HOUSTON — Saudi Arabian Oil Co.’s (Saudi Aramco) Saudi Refining Inc. subsidiary and Royal Dutch Shell plc’s U.S. downstream affiliate signed a non-binding letter of intent to divide the assets of Motiva Enterprises LLC. The joint venture was formed in 1998 and has operated as a 50/50 refining and marketing joint venture since 2002.
Under terms of the agreement, Saudi Refining 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, La., refinery and the Convent, La., refinery; retain nine distribution terminals; and maintain the Shell-branded markets in Florida, Louisiana and the Northeast 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's downstream director.
All parties involved in the transaction added that they are committed to supporting the venture during the transition period and assured excellent customer service during this time.
"Motiva has benefited greatly from the nearly two decades of support and resources provided by Shell and Saudi Aramco,” said Dan Romasko, Motiva president and CEO. “While the parties work toward 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."
Abdulrahman F. Al-Wuhaib, senior vice president of downstream for Saudi Aramco, noted its subsidiaries and affiliates have had a presence in the United States for more than 60 years and the Motiva joint venture has served its business objectives well for several years.
“However, it is now time for the partners to pursue their independent downstream goals,” he said. "The Port Arthur refinery will advance Saudi Aramco's global downstream integration strategy through supply and 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.”
Houston-based Motiva Enterprises LLC supports a network of approximately 8,300 Shell-branded gasoline stations in the eastern and southern United States. It also refines and distributes petroleum products.