SAUDI ARABIA - Motiva Enterprises.

Saudi Aramco's main market share investment is in the US, until 9/11 Riyadh's main ally, where Star Enterprise's merger with Shell, done in the first half of 1998, created the biggest downstream venture in the south and east of the American market. Motiva, based in Houston, has four refineries with a total capacity of 823,000 b/d and about 14,000 retail stations, together with storage and terminal facilities. Motiva's share of the US market now is about 8%.

Having raised its stake in Motiva to 50% under an Oct. 9, 2001 deal with ChevronTexaco, with Shell holding the other half, Saudi Aramco is that 2003 will be a more profitable years than in 2002. A restructuring of Motiva since early 2002 began to turn it around in early 2003.

Motiva's assets used to be bigger before the 1998 merger. As required by the FTC, the company had to sell a refinery, numerous retail stations and some oil pipeline and terminal facilities before the merger was approved. Saudi Aramco's equity is held by its Houston-based unit Saudi Refining Inc. (see background in the 1999 survey of Saudi Arabia in Vol. 53).

Under the Oct. 9, 2001 deal with ChevronTexaco, Shell bought the whole of Equilon. Thus it became the largest gasoline retailer in the US, with a 14.4% share of this market. To compare, the biggest energy company in the US, ExxonMobil, has a 12% share of the American market which is equal to that of BP. ChevronTexaco now is the second largest US energy company next to ExxonMobil but its share of the American gasoline market is much smaller than those of BP and ExxonMobil.

Equilon and Motiva hold exclusive rights to use the Texaco brand for US gasoline sales until July 1, 2004. The two hold non-exclusive rights to the brand until June 30, 2006. In July 2006, ChevronTexaco will assume exclusive rights to the Texaco brand in the US.

Equilon, however, has not done well in the past two years. Shell's acquisition of the US lubricants giant, Pennzoil-Quaker States, has been one of the measures to boost its profits by 2004. Shell has been rebranding the petrol stations it acquired from Texaco. Since early 2002 Shell has been selling big components of assets bought from Texaco and is directing new E&P investment to oil sands, natural gas and deep-water oil.

In August 2002, Shell scrapped the Equilon refining unit and, together with Saudi Refining Inc., dismantled the Equiva Services trading division. Equiva Trading and Equiva Services, had been created in 1998 to provide operational support. They and Motiva were to strengthen Saudi Aramco's position as the biggest crude oil exporter to the US, with supplies having peaked at 2.23m b/d in May 2003 (see OMT No. 15). But they turned out to be liabilities. Shell's US trading arm, Stusco, has since assumed the trading contracts and operations o Equiva. It was planned that, after the transition, Stusco would trade in about 5m b/d of crude oil and 1.5m b/d of petroleum products.

Equilon's assets have been transferred to Shell Oil Products US and to Shell Pipeline Co. Ownership of the 340,000 Deer Park refinery in Texas remains a JV with Mexico's state-owned Pemex. Shell Trading US has assumed Equiva's responsibilities.