Shell and Saudi Aramco have announced plans to break up Motiva Enterprises LLC and divide up the assets, almost two decades after forming the US oil refining and marketing joint venture.
The split comes after early signs of the break-up emerged last summer when Motiva set up its own oil products trading business separate from Shell.
In the proposed division of assets, Saudi Aramco, through its wholly owned Saudi Refining Inc (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 parts of 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 North-eastern 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 US 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 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,” he said.
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.”
Under the terms of the LOI, the partners will evaluate options and select an optimal deal structure with the objective of formalising a definitive agreement to divide and transfer Motiva Enterprises’ assets, liabilities and employees between the companies. The companies will make a further joint announcement in due course, the statement said.