Saudi Aramco and Shell one step closer to Motiva break-up

Saudi Aramco and Shell one step closer to Motiva break-up

Saudi Aramco and Royal Dutch Shell (LSE:RDS) have agreed a deal which will finalise the break-up of a 19-year partnership known as Motiva Enterprises LLC.

The Saudi oil giant will make a US$2.2 billion balancing payment to Shell, which will be split between debt and cash and subject to adjustments. The transaction is expected to be formalised in the second quarter of 2017.

Aramco will take over almost all of Motiva’s $3.2 billion net debt, including $1.5 billion of Shell’s share, according to a press release from the Anglo-Dutch company.

The deal will give Aramco full ownership of the Motiva Enterprises name, as well as the largest refinery in the US at Port Arthur in Texas, and 24 distribution terminals across the country.

Abdulaziz Al-Judaimi, senior vice president of downstream at Saudi Aramco said: “This transaction is well aligned with Aramco’s global downstream strategy.

“Motiva is a strong competitor among 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.”

Shell will hope this latest divestment will ease its increasing company debt, and is currently working on a further $2.8 billion worth of disposals.