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Largest U.S. refinery now belongs to Saudi Arabia

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Reuters reported that the relationship started to fray after Motiva announced a $10 billion expansion of the Port Arthur refinery, doubling its capacity to 603,000 barrels per day, making it America’s largest refinery. It produced gasoline, diesel and jet fuel. A leak shortly after the expansion was completed in 2012 led to ballooning costs, exacerbating tension between Shell and Aramco. A 2015 workers strike also sparked anger between the two companies.

The two companies signed a nonbinding letter of intent, a plan that would divide up Motiva’s refineries between them. The refineries have a combined capacity of 1.1 million barrels per day and are all located close to each other. The breakup will allow Saudi Aramco to take over the Port Arthur refinery and 26 distribution terminals, and Aramco will also hold onto the Motiva brand name. Shell will take over the other two refineries, Convent and Norco, both located in Louisiana. Shell said that it would operate the two refineries as one plant with a combined throughput of 500,000 barrels per day.

The split will hand the largest U.S. refinery to the state-owned Saudi oil company. The Wall Street Journal speculates that it could also pave the way for some sort of listing of Aramco’s assets in a public offering, something that Saudi officials have alluded to for several months. Few expect Aramco to list its upstream production assets in Saudi Arabia; downstream assets are much more likely to be offered up.

SOURCE

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One Comment

  1. ex-motivadog says:

    with shell relinquishing control of the largest refinery in the US, to the Saudis they have effectively just given them too much control. they say they will buy more refineries in the near future, which means everyone will eventually be buying their fuel from them. lets hope the govt. steps in and ends this before it’s too late!

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