Saudi Arabian Oil Company (Saudi Aramco) has agreed to acquire Royal Dutch Shell’s 50% stake in Shell Saudi Arabia Refinery (SASREF) joint venture in Jubail Industrial City, in Saudi Arabia, for $631m.
Upon completion of the deal, Saudi Aramco will be the sole owner and operator of the SASREF joint venture, which operates the 305,000 barrels per day refinery.
The acquisition is part of Saudi Aramco’s long-term downstream growth strategy, which aims to increase the capacity of its refineries.
Saudi Aramco downstream senior vice-president Abdulaziz Al-Judaimi said: “The partnership with Shell has led to a strong record of performance and delivery of refined products.
“Saudi Aramco will take full ownership and integrate the refinery into its growing Downstream portfolio. SASREF will continue to be a critical facility in our refining and chemicals business and we look forward to further optimising its performance and long term viability.”
The refinery is equipped to produce several products, including liquefied petroleum gas, naphtha, kerosene, diesel, fuel oil and sulfur.
Shell Downstream director John Abbott said: “SASREF has been a long and successful partnership between Shell and Saudi Aramco.
“The refinery has operated with good reliability, and has an impressive safety record. We’re proud of what we have achieved together over the past four decades and will continue to explore new business opportunities.”
The sale is part of Shell’s effort to focus on refining portfolio, integrating with Shell Trading hubs and Chemicals.
Subject to regulatory approval, the transaction is scheduled to be completed later this year.
Recently, Saudi Aramco has agreed to acquire a 17% stake in South Korean refining company Hyundai Oilbank from Hyundai Heavy Industries in a deal worth around $1.25bn.
The investment in Hyundai Oilbank by the oil giant will be made through its subsidiary Aramco Overseas Company (AOC).
It is expected to support the crude oil placement strategy of Saudi Aramco by giving a dedicated outlet for Arabian crude oil to South Korea.
Established in 1964, the South Korean company has a refining capacity of 650,000 barrels of oil a day. The company is involved in oil refining, base oil, petrochemicals and retailing.