Saudi Arabian Oil Co. (Saudi Aramco) has agreed to pay Royal Dutch Shell Plc $2.2 billion as part of their agreement to finalize the split of their US-based joint venture Motiva Enterprises, Shell said in a statement.
Subsidiaries of both energy firms signed a binding agreement this week to separate assets, liabilities and businesses of Motiva. The JV operates three refineries on the US Gulf Coast.
Under the deal, Aramco’s Saudi Refining unit will take full ownership of the Motiva name and the 603,000-barrel-per-day (bpd) Port Arthur Texas refinery, the largest in the US.
The Saudi oil giant will also take over 26 distribution terminals and have exclusive license to use the Shell brand for gasoline and diesel sales in Texas.
The company will make the $2.2 billion balancing payment to Shell, and also assume almost all of Motiva’s net debt of $3.2 billion.
“Saudi Aramco will provide Motiva with the strong financial support and necessary liquidity needed to maintain an investment grade credit rating and capitalize on growth and expansion opportunities,” said Aramco CEO Amin Nasser.
Meanwhile, Shell will become the sole owner of Motiva's Louisiana refineries in Convent and Norco, where it operates a chemicals plant. The firm will also assume ownership of Shell-branded gasoline stations in Florida, Louisiana and the Northeastern region.
The transaction is subject to regulatory approval and is expected to close in the second quarter of 2017, both firms said.
Shell and Aramco initially announced the break-up agreement in March 2016, with both firms expecting to finalize the deal by October the same year.
However, the process was delayed as Shell sought $2 billion in compensation from Saudi Aramco, as the latter retains a larger share of the JV.
Comments
{{DisplayName}}
{{ElapsedTime}}