Maria Armental, 18 March 2016

Oil giants Royal Dutch Shell and Saudi Arabian Oil plan to end their longstanding fuel partnership, putting ownership of the biggest refinery in the US in Saudi Arabia’s hands.

Shell and Saudi Aramco formed their Motiva joint venture nearly two decades ago and spent $US10 billion ($13bn) to double the size of their plant in Port ­Arthur, Texas, in 2012.

The move made the 600,000 barrel-a-day fuel factory the largest in America; a significant portion of the petrol, diesel and jet fuel produced every day is exported to overseas markets.

Saudi officials in January floated the idea that shares of the state-owned oil company might be sold in a public offering, amid a broader push to privatise state-run companies and a protracted slump in oil prices.

At the time, many energy experts speculated any initial public offering would focus on the refining and petrochemical arms of Saudi Arabia’s state-owned energy company, not its oil exploration and production assets.

The Motiva split could help pave the way for such an equity offering, while also giving Shell assets it could place in its tax-­advantaged master limited partnership, said Sam Margolin, an energy analyst at Cowen & Co.

Extracted in full from The Australian.