Saudi Aramco and Shell agree on terms of Motiva asset breakup

[CHICAGO] Saudi Arabian Oil Co and Royal Dutch Shell Plc finalised the division of assets from the breakup of their 19-year refining partnership known as Motiva Enterprises LLC.

Saudi Aramco's Saudi Refining unit will take full ownership of the Motiva Enterprises name and legal entity, including the refinery at Port Arthur in Texas and 24 distribution terminals, according to a joint statement dated March 6.

Shell will take sole ownership of the Norco and Convent refineries in Louisiana and 11 distribution terminals, according to the statement.

The transaction is subject to regulatory approval and expected to close in the second quarter of 2017, the companies said. Shell and Saudi Aramco, as the oil explorer is known, agreed last year to end the Motiva venture, which oversaw the three oil refineries, as well as fuel terminals and fuel-branding rights in multiple US states.

Under the agreement, Motiva will have the exclusive right to 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's markets will be Alabama, Mississippi, Tennessee, Louisiana, a portion of the Florida panhandle, and the North-eastern region of the US.

Motiva, formed in 1998, was a major player in US refining with capacity to process more than 1.1 million barrels of crude a day.

It was plagued by cost overruns and construction delays that eroded profits, Fadel Gheit, an analyst at Oppenheimer & Co, said in March 2016. The 600,000 barrel-a-day Port Arthur refinery suffered leaks and fires that delayed a $10 billion expansion to double the size of the plant.

A former partner in Motiva, Chevron Corp exited the partnership in 2002 as part of a settlement with regulators that allowed it to acquire Texaco Inc. Chevron's divestment left Shell and the Saudis as 50-50 partners in the venture.

BLOOMBERG