SAUDI ARABIA - The European Market.

In expanding its downstream presence overseas, Saudi Aramco has not made much headway in Europe. Its first step there came on April 6, 1995, when it signed an agreement to buy a 50% stake in Motor Oil Hellas (MOH) of Greece and its marketing arm Avin Oil SA, under a $430m deal with the Vardinoyannis family.

The deal covered a 100,000 b/d refinery at Corinth, southern Greece; a network of about 700 service stations in Greece, with refined products to be marketed elsewhere in Europe as well; a crude oil supply arrangement for some 80,000 b/d, which represented a four-fold increase in an existing Saudi term contract; and a stake for Saudi Aramco in MOH's storage of around 3m barrels and its international sales of automotive, jet and bunker fuels. The final deal was signed on March 14, 1996, in London. The Saudi side of MOH's management was undertaken by Saudi Aramco's

Dutch unit called Aramco Overseas Co. (see background in Vol. 57, No. 19).

However, Motor Oil Hellas (MOH) only managed to sell 30% of the shares it offered. This forced the National Bank of Greece, HSBC and other banks managing the sale to buy the remaining 70% themselves; and they lost about $25.7m as a result. During the first day of trading in early August 1996, MOH stock fell sharply.

In September 1997, Saudi Aramco cancelled plans to buy 27.5% in Petroleos de Portugal (Petrogal).