Saudi Aramco, Shell finalize deal to split up Motiva

Saudi Arabian Oil Co., or Saudi Aramco, and Royal Dutch Shell PLC (NYSE: RDS-A, RDS-B) announced late March 6 they have finalized their agreement to break up Houston-based Motiva Enterprises LLC, a year after plans were first announced.

The companies signed a letter of intent to divide the joint venture’s assets back in March 2016, and now binding definitive agreements between subsidiaries Saudi Refining Inc. and SOPC Holdings East LLC have been signed, according to a March 6 press release. The deal, which previously didn’t have a targeted closing time frame, now is expected to close in the second quarter of 2017.

As part of the final deal, Saudi Aramco will pay $2.2 billion, including the assumption of Shell’s $1.5 billion portion of Motiva’s debt, according to a press release from Shell. As of Dec. 31, Motiva’s net debt was $3.2 billion, of which Shell will assume only $100 million.

Under the terms of the deal, Saudi Refining Inc. will assume:

  • Full ownership of the Motiva Enterprises LLC name and legal entity.
  • Motiva’s 600,000-barrel-per-day Port Arthur refinery in Port Arthur, Texas, which includes a 40,000-barrel-per-day base oil manufacturing plant..
  • 24 distribution terminals.
  • The right to exclusively sell Shell-branded gasoline and diesel in Georgia, North Carolina, South Carolina, Virginia, Maryland and Washington, D.C., plus the eastern half of Texas and most of Florida.

Meanwhile, Shell will take:

  • The 235,000-barrel-per-day Norco refinery, in St. Charles Parish, Louisiana, where Shell operates a chemicals plant.
  • The 230,000-barrel-per-day Convent refinery in St. James Parish, Louisiana
  • 11 distribution terminals.
  • Shell-branded markets in Alabama, Mississippi, Tennessee, Louisiana, part of the Florida panhandle and the northeastern U.S.

The deal allows both companies to better focus their downstream operations, and the assets and other portions of Motiva’s business have been “divided by geography in a way to ensure each partner has an integrated and robust business,” according to a press release from the companies. Both companies expressed their commitment to supporting the joint venture during the transition period.