HOUSTON, March 17 (UPI) -- The state-controlled Saudi Arabian Oil Co. is taking over assets from a partnership formed 18 years ago, including a Texas refinery, Royal Dutch Shell said.
Royal Dutch Shell and the Saudi Arabian Oil Co. announced the signing of a non-binding letter of intent to divide assets of Motiva Enterprises, a 50-50 refining and marketing joint venture formed between the two companies in 1998.
The Saudi company, known also as Saudi Aramco, keeps the Motiva name, gets the license to use Shell brands for gasoline and diesel sales in Texas, and assumes sole ownership of a refinery in Port Arthur, Texas. Shell, in return, takes over refineries in Louisiana and maintains brand identity in Florida, Louisiana and parts of the northeast United States.
"This is consistent with both the group and downstream strategy to provide simpler and more highly integrated businesses, which deliver increased cash and returns," John Abbott, a director of operations for Shell, said in a statement.
Shell posted weak results for the fourth quarter as it came under pressure from the steep drops in crude oil prices last year. In February, the company completed a $7 billion tie up with BG Group, which the Dutch company said was the start of a new era focused in part on liquefied natural gas.
For Saudi Aramco, the world's largest oil company, the Motiva move is emblematic of a need to pursue independent strategies. In January, the company said it was reviewing the potential to list its shares on the public market for the first time.
Riyadh is embracing a set of policies and structural reforms meant to reduce the economic dependency on oil. Part of the five-year reform policy includes the privatization of some sectors of the Saudi economy. .