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Saudi Aramco to Pay Shell $2.2 Billion in Refinery Breakup

by Javier Blas, Joe Carroll, and Margot Habiby: 7 March 2017

Saudi Arabian Oil Co. will pay Royal Dutch Shell Plc $2.2 billion including debt to finalize the breakup of a 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 largest refinery in the U.S. at Port Arthur in Texas, and 24 distribution terminals, according to a joint statement. Shell will take sole ownership of the Norco and Convent refineries in Louisiana and 11 distribution terminals.

Aramco will make a $2.2 billion balancing payment, split between debt and cash and subject to adjustments including working capital, Shell said in a separate statement. Aramco will assume almost all of Motiva’s $3.2 billion of net debt, including $1.5 billion of Shell’s share. A cash payment will cover the balance, Shell said. The arrangement will also take the Anglo-Dutch company closer to its target of selling $30 billion of assets in the three years to 2018.

“Motiva is a strong competitor among U.S. refiners, and we value this important link with the dynamic U.S. energy sector,” said Abdulaziz Al-Judaimi, senior vice president of Aramco’s downstream business. “Our intent is to continue providing Motiva with strong financial support as it transitions into a stand-alone downstream affiliate.”

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Idemitsu founding family crosses a line with the Saudis

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HIROFUMI MATSUO, Nikkei senior staff writer

TOKYO — Idemitsu Kosan‘s founding family is treading on treacherous ground as it attempts to block a planned merger with Showa Shell Sekiyu.

The family’s opposition to the deal, struck last November, has baffled the rest of the Japanese oil industry and apparently riled Saudi Arabia, the world’s largest oil exporter. The future of Japan’s second-largest oil distributor hangs in the balance. 

Speculation about Saudi anger has swirled in the Japanese oil sector since the family’s stance came to light in late June. Saudi Arabian Oil Co., better known as Saudi Aramco, the kingdom’s state oil company, is Showa Shell’s No. 2 shareholder, after Royal Dutch Shell. The Saudi company intends to retain a stake in the new entity created through the Idemitsu-Showa Shell merger. Under the proposal, Idemitsu would buy Showa Shell shares held by Royal Dutch Shell.

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U.S. refinery strike widening to include largest refinery

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Screen Shot 2015-01-06 at 21.31.03HOUSTON Sat Feb 21, 2015 12:13am EST

(Reuters) – The U.S. refinery strike was widening on Friday night as workers at the nation’s largest refinery gave notice of a walkout beginning at 12 a.m. (0600 GMT) on Saturday, the United Steelworkers union (USW) said.

Shortly after talks between union and oil company representatives ended on Friday night, the union notified Motiva Enterprises [MOTIV.UL] of a strike by its members at the company’s 600,250 barrel per day (bpd) refinery in Port Arthur, Texas.

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Royal Dutch Shell Saudi relationship in serious danger?

The Washington Post has reported today that the Dutch foreign minister Frans Timmermans is considering flying to Saudi Arabia in an attempt to defuse the situation, which includes threats of looming sanctions against Dutch interests, including Royal Dutch Shell.

By John Donovan

Royal Dutch Shell Group has had a long relationship with the Saudi regime.

In the USA, Motiva Enterprises is a joint project of Shell and Saudi Aramco. The company owns three refineries and 35 refined product terminals.

Extract from the Motiva website

Motiva markets Shell gasoline in 49 states and the District of Columbia together with Shell Oil Products US. Together we lead the industry in national retail volume and market share in one of the world’s best known gasoline brands. We also refine and market gasoline and other petroleum products under the Shell brand across the eastern and southern parts of the US, providing product to over 8,200 Shell-branded retail outlets.

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MOTIVA REFINERY DEBACLE: Caustic – the same thing that blew up Norco. Unbelievable

Might as well melt it all down and start over…

CAUSTIC COMMENTS ON MOTIVA REFINERY DEBACLE

FIRST COMMENT (FROM SHELL BLOG)

Re: Motiva Refinery Debacle – Unbelievable. Lock-out, Tag-out, the most basic safety rule, strikes again.

The same thing that blew-up Piper Alpha. Caustic – the same thing that blew up Norco. Unbelievable.

And Caustic doesn’t just pit stainless, it causes cracks in stress areas. They will have to use advanced ultrasound techniques on every millimeter of hundreds of miles of piping because a hidden crack will propagate and cause a failure days or years in the future.

Might as well melt it all down and start over.

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Insight: In hours, caustic vapors wreaked quiet ruin on biggest U.S. refinery

(Reuters) – In the end, all it took was a small chemical spill — perhaps less than a barrelful — to bring down the newest, mightiest oil refinery in the United States.

By Erwin Seba

PORT ARTHUR, Texas | Mon Jun 25, 2012 11:50am IST

(Reuters) – In the end, all it took was a small chemical spill — perhaps less than a barrelful — to bring down the newest, mightiest oil refinery in the United States.

Three weeks ago, while workers repaired a minor leak at the Port Arthur, Texas plant owned by Motiva Enterprises, a few gallons a day of so-called “caustic” was inadvertently seeping into the newly built crude distillation unit (CDU), the 30-story-high network of interconnected cylinders and latticed pipelines at the heart of the refining process.

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Motiva crude unit remains out of production-sources

Fri Jun 8, 2012 10:25pm IST

(Reuters) – A newly commissioned 325,000-barrel-per-day (bpd) crude distillation unit (CDU) remained out of production on Friday at Motiva Enterprises’ 600,000-bpd Port Arthur, Texas, refinery, said sources familiar with operations at the plant.

No firm date has been set for returning the CDU to production, the sources said. Workers were still attempting to find the source of a leak that is interfering with the unit’s operation, they said.

Once the source of the leak is found, repairs and restoration to normal operation are expected to take two to three days, they said.

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Motiva Port Arthur refinery unit still offline-sources

Tue Jun 5, 2012 3:02pm EDT

* Crude unit expected back in operation Wednesday A.M.
* New unit was centerpiece of $10-billion expansion

HOUSTON, June 5 (Reuters) – A newly commissioned 325,000 barrel per day (bpd) crude distillation unit at Motiva Enterprises’ 600,000 bpd Port Arthur, Texas, refinery remained out of production on Tuesday for repairs to a leaking valve, according to sources familiar with refinery operations.

The unit was expected to return to production as early as Wednesday morning once the repairs are completed, the sources said. The CDU was placed on circulation meaning it has crude oil in it and remains at the high temperature needed for refining.

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Motiva Port Arthur HCU shut by fire

Motiva Port Arthur HCU shut by fire -filing, company

HOUSTON May 13 (Reuters) – A lube oil hydrocracking unit was shut on Saturday at Motiva Enterprises’ 600,000 barrel per day (bpd) Port Arthur, Texas, after a fire, according to a notice filed with Texas pollution regulators.

No injuries were reported due to the fire, a Motiva spokeswoman said in a statement. The company declined to identify the unit involved.

The fire broke out in a heater check valve, according to the notice filed with the Texas Commission on Environmental Quality.

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Saudi Aramco, Shell Extend Natural Gas Drilling To 2015

By Angus McDowall of DOW JONES NEWSWIRES OCTOBER 26, 2010

LONDON (Dow Jones)–A joint venture between Saudi Arabian Oil Co., known as Saudi Aramco, and Royal Dutch Shell PLC (RDSB) to drill for natural gas in the kingdom’s empty quarter has extended its exploration license by five years to 2015.

The South Rub al-Khali Co., or SRAK, was one of three ventures launched in 2003-04 that gave international oil companies upstream access to Saudi Arabian energy reserves for the first time since 1980.

“We…requested for a second exploration period, which means a new commitment from the company including drilling wells and collecting seismic data,” a spokesman for SRAK told Dow Jones Newswires Tuesday. “The government officially approved our request of entering a second exploration period for five years.”

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Slick engulfs oil industry’s sense of optimism

THE SUNDAY TELEGRAPH

At the World Economic Forum meeting in Davos in January there was standing room only at the session on the future of oil. Peter Voser, the chief executive of Royal Dutch Shell, sat alongside the head of the Saudi oil giant Aramco, Khalid al Falih, and the chairman of Total, Thierry Desmarest. In the middle was Tony Hayward, the chief executive of BP. The session was so popular, Davos staff had to turn people away at the door.

By Kamal Ahmed
Published: 9:02PM BST 01 May 2010

Mr Hayward spoke about the pressures the industry was under as it struggled to keep up with ever rising demand from the emerging economies. Such was the “supply challenge” companies would have to explore more and more difficult environments from which to gain oil – the lifeblood of markets around the world. A 40pc increase in demand would create the need for 15m barrels per day (bpd) increased production over the next two decades.

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Shell Confirms Worker’s Death At Motiva Port Arthur Refinery

THE WALL STREET JOURNAL

APRIL 19, 2010

NEW YORK (Dow Jones)–Royal Dutch Shell said Monday that a worker died at the Motiva Port Arthur refinery it operates in Texas.

The worker’s death “can be confirmed, and we are investigating what the cause was,” a Shell spokeswoman said. No further details were available, but the company said a statement will be issued soon.

The Motiva Port Arthur refinery, 50% joint venture between units of Royal Dutch Shell PLC (RDSA, RDSA.LN) and Saudi Aramco, has the capacity to process 275,000 barrels of crude oil a day.

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Shell/Motiva CEO Bob Pease dragged into Tom Purves controversy

By John Donovan

The following is a self-explanatory email I sent earlier today to Robert (Bob) Pease, President & Chief Executive Officer of Motiva Enterprises LLC, which is jointly owned by a subsidiary of Saudi Aramco and Shell.

From the Motiva Website:

Formed in 1998, Motiva Enterprises LLC operates primarily in the eastern and southern United States. Its operations include nearly 7,700 Shell-branded gasoline stations, three refineries with a combined capacity of 740,000 barrels per day, and ownership interest in 41 refined product storage terminals with an aggregate storage capacity of approximately 19.8 million barrels.

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US Justice Department continues investigation of BAE Systems Al-Yamamah arms deal

Royal Dutch Shell and BP played pivotal roles in the "oil for arms" deal said to be the biggest scandal in history. We have published evidence including declassified documents revealing details of the top secret agreements involving the UK government, BAE Systems, Shell, BP, and members of the Saudi Royal family. The US Justice Department investigation is highly sensitive and the outcome potentially explosive for Shell in view of its close relationship with the state owned oil company Saudi Aramco, involving joint ventures in the USA under the Shell/Motiva umbrella.

Showa Shell, Saudi Aramco to form solar power JV

(Reuters) - Japanese oil distributor Showa Shell Sekiyu KK and Saudi Aramco Oil Co plan to jointly set up small-scale solar power facilities in Saudi Arabia next year, the Nikkei business daily reported without citing sources.

Showa Shell, Saudi Aramco to start solar power project

Reuters

Tue Jun 23, 2009 9:10pm EDT

June 24 (Reuters) – Japanese oil distributor Showa Shell Sekiyu KK (5002.T) said on Wednesday it and Saudi Aramco Oil Co had agreed to start a feasibility study on solar power business in Saudi Arabia. Showa Shell, Japan’s fifth-biggest oil refiner, is investing in thin-film solar cells in a search for new revenue streams. (Reporting by Taiga Uranaka)

© Thomson Reuters 2009 All rights reserved

REUTERS ARTICLE

Showa Shell Rises to Nine-Month High on Solar Project

June 24 (Bloomberg) -- Showa Shell Sekiyu KK, a Japanese refiner and solar-equipment maker, rose to the highest in nine months after saying it will build solar plants in Saudi Arabia to expand its alternative energy business.

Motiva’s Texas refinery expansion “proceeding”

Motiva, a joint venture between Saudi Aramco and Shell, in March announced the project's completion would be delayed by two years to 2012, leading to speculation it would be canceled altogether as the recession continues to crush U.S. demand for motor fuels.

Aramco to cut oil spending

Dozens of smaller oil companies, starved of cash and facing stiff financial constraints from low oil prices, have in recent months slashed project spending, though most big privately run oil firms, such as Royal Dutch Shell PLC, have maintained their spending plans for 2009.

Aramco-Shell Saudi refinery resumes exports

DUBAI, Feb 23 (Reuters) - Saudi Aramco and Royal Dutch Shell's (RDSa.L) joint venture Jubail refinery restarted oil exports on Monday after bad weather interrupted the flow for four to five days, shipping sources said.

Lay-offs at Motiva project while construction continues

According to Verna Rutherford of Motiva, changes are being implemented to assure tighter control of costs on the $7 billion refinery expansion project that began December 2007. Demand for Motiva’s products is down, and with lower demand, margins are also down, making tight cost control essential.

Showa Shell Seikyu looks to solar power

Arai also had specific comments regarding the future roles of his firm's leading shareholders—Royal Dutch Shell PLC and Saudi Aramco.

Japan refiners to be stirred, not shaken, by merger

"Cosmo and Showa Shell's main shareholders are different, so a merger is unlikely now," said UBS' Ito. Saudi Aramco increased its stake in Showa Shell to 15 percent stake in 2005, while IPIC, the investment arm of the Abu Dhabi government of the United Arab Emirates bought 20 percent in Cosmo last year to become the top shareholder.

Shell, Saudi Arabia, Arms-for-Oil, Corruption, & Radioactive Contamination

Assertion on 13 November 2008 by Richard Wiseman (Chief Ethics & Compliance Officer of Royal Dutch Shell Plc) to John Donovan:

"It is only because you know that I am utterly incapable of arranging the actions you ascribe to me, that you repeatedly accuse me of things of which you know I am completely innocent, safe in the believe that I would take no action."

Spending on oil and gas projects collapses

This week it emerged that Royal Dutch Shell had shelved plans for a $3 billion (£2 billion) coal-to-liquid fuels project in Australia. Last month the group announced a delay to the expansion of its oil sands mining project in Northern Alberta, Canada.

Shell, Aramco, Petrobras Speed Project Spending Cuts

Nov. 19 (Bloomberg) -- The biggest oil companies including Saudi Aramco,Royal Dutch Shell Plc and Petroleo Brasileiro SA are accelerating spending cuts and delaying projects as the world enters a recession, said Morgan Stanley & Co.

What does a company making $250 billion a year do for an encore?

That confidence springs from cash, mountains of it, and know-how. The 100% state-owned Aramco manages all its own projects and invests in the latest technology. It's easily the most profitable company on the planet:

Motiva Enterprises LLC

Motiva Enterprises (Motiva) is a joint venture between Shell (now known as Royal Dutch Shell) and Saudi Aramco. It refines, distributes, and markets oil products in eastern and southern US. The company operates in the US. It is headquartered in Houston, Texas. Motiva is a privately held company and does not publish its financial results.

Conoco, Aramco Delay Saudi Refinery

Project delays in the high-cost Canadian oil sands have been announced in the past month by Royal Dutch Shell PLC, Suncor Energy Inc. and Nexen Inc.

Saudi Aramco launches project review amid declining oil prices

Saudi Aramco, the world's biggest oil company, is reviewing some of its long-term projects following the sharp decline in oil prices and a dramatic slowdown in demand growth for crude, a senior official said yesterday.

Saudi Aramco Names Khalid Al-Falih as Chief Executive

Al-Falih also chaired the country's natural gas exploration, a venture between Aramco and Royal Dutch Shell Plc.

Shell says U.S. Gulf refineries ramping up after Ike

Shell said Saturday its U.S. Gulf refining throughput was about 1 million barrels per day out of a total of 1.2 million bpd.

American Red Cross Receives $1 million from Shell Oil Company and Motiva Enterprises LLC

Shell and Motiva announced a $1 million donation to the Red Cross to support the organization’s large and lengthy hurricane relief efforts in Texas and Louisiana.

More refineries press restart button

Shell expects to start making motor fuels at its Deer Park refinery this week. The Motiva plant in Port Arthur, which Shell co-owns with Saudi Aramco, could start making gasoline and other products by the end of the week, Shell said.

Shell confirms find at Saudi Empty Quarter -report

DUBAI, Aug 23 (Reuters) - Royal Dutch Shell said a joint venture with state-owned Saudi Aramco had discovered a hydrocarbons system at the kingdom's Empty Quarter, Middle East Economic Digest (MEED) reported.

Despite rocketing prices, outlook is bleak for oil majors

"It's more and more difficult now to know which are national companies and which are majors because the majority of the nationals are becoming internationals," said Linda Cook, head of gas and electricity at Anglo-Dutch Shell.

Energy industry upheaval to benefit oil services

Some suggested that the international oil companies such as ExxonMobil, BP and Royal Dutch Shell would have to change their business model to become more like service companies if they were to prosper.

Sulphur price soars on fertiliser demand

“Shell is one of the most-efficient producers of sulphur,” Barry Clarke, a sulphur market analyst for Pentasul, said. Shell produces about 3.5 million tonnes of sulphur, much of it from its Canadian oil sands business, and its cost, Mr Clarke reckons, is merely the rail freight cost of getting the sulphur to a port, about $25 a tonne.

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