Shell, Aramco U.S. refining breakup lets both pursue ambitious goals

Thu Mar 17, 2016 9:29am EDT
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By Ron Bousso

LONDON (Reuters) - The breakup of Royal Dutch Shell's and Saudi Aramco's giant U.S. refining joint venture draws a line under an often rocky relationship and allows Aramco to accelerate an ambitious public offering and Shell to push ahead with a large asset sale.

The two energy giants' plan to dissolve Motiva Enterprises after a near 20-year partnership leaves both with fully-owned refineries and gas stations in the United States.

Refineries have recently enjoyed a boom time as a near 70 percent plunge in oil prices since mid-2014 spurred demand for gasoline from around the world, helping many oil companies recover revenue lost from oil production.

"The deal gives both companies a lot of flexibility," said

Jason Gammel, an analyst at Jefferies.

Saudi Arabia's oil champion Aramco, which will own the largest U.S. refinery in Port Arthur, Texas and retain 26 distribution terminals, could fold the assets into one global refining subsidiary in which it is considering selling a stake, industry sources said.

The giant refining group would most likely comprise of Aramaco's domestic refineries, including its joint refinery with Shell in Jubail known as SASREF, as well as its overseas plants in China and South Korea, the sources said.

Aramco, the world's largest oil company, has said it was considering options including a stock market listing, and possibly including downstream assets.   Continued...

Shell's company logo is pictured at a gas station in Zurich April 8, 2015.  REUTERS/Arnd Wiegmann