SAUDI ARABIA - Motiva Enterprises.

Saudi Aramco's main market share investment is in the US, Riyadh's principal 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. The venture, Motiva Enterprises based in Houston, has a refining capacity of 823,000 b/d and over 14,500 retail stations, together with storage and terminal facilities. Motiva's assets were bigger. As required by the Federal Trade Commission (FTC), the company had to sell of a refinery, numerous retail stations and some oil pipeline and treminal facilities before the merger was approved.

Motiva is owned 35% by Shell, 32.5% by Texaco and 32.5% Saudi Refining, a US unit of Saudi Aramco. Saudi Aramco's President and CEO Abdullah Jum'ah became Motiva's chairman in mid-1998 and Wilson Berry, formerly president of Texaco's refining and marketing, was made the company's CEO.

A merger between Shell and Texaco created the biggest downstream venture in the centre and west of the US called Equilon Enterprises and owned 56% by Shell. Shell's president and CEO became head of Equilon, which also had to sell off refineries and other assets before this merger was approved by the FTC. Now Equilon's refining capacity is less than 800,000 b/d.

Units of Motiva and Equilon, Equiva Trading and Equiva Services, are now providing the two main entities with vital operational support. They and Motiva have strengthened Saudi Aramco's position as the biggest crude oil exporter to the US, with supplies in the first half of 1999 having averaged almost 1.44m b/d (see OMT No. 20). In April 1999 Texaco's CEO Peter Bijur said he expected Motiva to save $800m in annual earnings from 2000, thanks to the merger. The merger has led to a strategic alliance between Shell and Saudi Aramco for downstream investments in India and other markets (see below). Within Saudi Arabia, Shell is SABIC's partner in the kingdom's biggest petrochemical venture and Saudi Aramco's partner in the biggest export refinery.

Saudi Aramco and Texaco have been 50-50 partners in Star Enterprise since that was formed in 1988 and became the sixth largest gasoline retailer in the US. Star operated in 26 states in the south and east, and in the district of Columbia. Star was Saudi Aramco's first major foreign joint venture. The partnership began in June 1988 when Saudi Aramco made a cash purchase from Texaco of a half share in three refineries with a total capacity of 605,000 b/d at Convent, Louisiana (230,000 b/d), Delaware City (140,000 b/d), and Port Arthur, Texas (235,000 b/d). Star then got around 10,000 branded distribution outlets and 1,500 service stations. The assets of Star were in early 1998 valued at more than $4.2 bn, compared to $2.5 bn when the partnership deal was signed in late 1988.