John Abbott, downstream director, Shell.
Saudi Arabian Oil Company (Saudi Aramco) and Royal Dutch Shell (Shell) announced recently the signing of binding definitive agreements between Saudi Refining (a wholly-owned subsidiary of Saudi Aramco) and SOPC Holdings East (a US downstream subsidiary of Shell) on the separation of assets, liabilities and businesses of Motiva Enterprises (Motiva).
This step marks a major milestone toward closing the transaction. Subject to regulatory approval, the transaction is expected to close in the second quarter of 2017.
Abdulaziz Al-Judaimi, senior vice president – downstream, Saudi Aramco, said: “This transaction is well aligned with Aramco’s global downstream strategy. Motiva is a strong competitor among the US refiners, and we value this important link with the dynamic US energy sector. Our intent is to continue providing Motiva with strong financial support as it transitions into a stand-alone downstream affiliate. We have a long history with the Motiva team, and we are proud of the impressive strides they have made in recent years toward building on the company’s core strengths.”
John Abbott, downstream director, Shell, said: “A simplified, integrated business structure will emerge from this deal for us in the United States and that is consistent with the stated goal of making Shell a world-class investment opportunity. We have today created a set of assets that plays to our strengths. This portfolio upgrade will increase optionality and strengthen Shell’s downstream business.”
The discontinuation of the joint venture and redistribution of the assets allows each company to focus its downstream business. Per the terms of the non-binding letter of intent the partners signed in March 2016, both companies have evaluated options and through constructive and successful negotiations selected an optimal deal structure to divide and transfer Motiva’s assets, liabilities and businesses between the companies.
Dan Romasko, president and CEO, Motiva, said: “We are nearing completion of our preparations to support stand-alone operations upon transaction close. As always, we remain focused on safe and profitable operations and serving our customers exceptionally well.”
Both Motiva owners are fully committed to supporting the venture during this period of transition and assuring excellent customer service and continued health, safety and environmental performance. Owner financing support arrangements for Motiva will remain in place throughout the transition, and both parties are committed to maintaining Motiva’s balance sheet strength and liquidity.
The final negotiated transaction includes the following: Saudi Refining will assume full ownership of the Motiva name and legal entity, including the refinery at Port Arthur, Texas and 24 distribution terminals. Additionally, Motiva will have the right to exclusively sell Shell-branded gasoline and diesel in Georgia, North Carolina, South Carolina, Virginia, Maryland and Washington, DC, as well as the eastern half of Texas and the majority of Florida. Shell will assume sole ownership of the Norco refinery (where Shell operates a chemicals plant), the Convent refinery, 11 distribution terminals, and Shell-branded markets in Alabama, Mississippi, Tennessee, Louisiana, a portion of the Florida panhandle, and the North-eastern region of the US. These assets will be fully integrated with Shell’s downstream business in North America.