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 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 hoping that a restructuring of this complex venture would turn it around as it has been making a loss.

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 detailed background in the previous survey of Saudi Arabia in Vol. 53).

Under the Oct. 9 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.

ExxonMobil, already the biggest single investor in Saudi Arabia's downstream sector, leads two consortia which would invest over $25 bn in integrated mega-ventures in the kingdom based on natural gas. Shell, which leads one consortium for ventures based on gas, is the second biggest investor in the Saudi downstream.

Units of Motiva and Equilon, Equiva Trading and Equiva Services, were created in 1998 to provide the two 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 averaging between 1.35-1.4m b/d (see OMT No. 18).

Equiva Trading now has Texaco's stake in an e-retailing company called HoustonStreet. ChevronTexaco has major stakes in several e-trading firms in the US, including a bunkering service venture called OceanConnect and a gas and power seller called Dynegy.