The Saudi Arabian Oil Company (Saudi Aramco) on Monday signed an agreement that will expand its worldwide refining and marketing presence and ensure a continued source of high quality refined petroleum products in Japan, one of Saudi Aramco's most important markets for crude oil.
Through the agreement, signed with Royal Dutch/Shell Group, Saudi Aramco will acquire a 9.96% strategic shareholding in Showa Shell, a publicly traded Japanese refining and marketing company.
As part of this transaction, Saudi Aramco will supply a minimum of 300,000 barrels per day of Arabian crude oil.
The transfer of shares is expected to be completed in August this year, subject to obtaining regulatory approvals. Saudi Aramco has also agreed in principle to acquire an additional 4.99% of Showa Shell from the Royal Dutch/Shell Group, subject to satisfaction of certain commercial conditions.
Showa Shell is one of the largest refiners in Japan, with access to 515,000 barrels per day of refining capacity through three affiliated refining companies. The company also markets refined products through a Shell branded retail network of about 5,000 service stations.
Saudi Aramco's partnership with Showa Shell's largest shareholder, Royal Dutch/Shell Group, will enhance Showa Shell's refining and marketing business in Japan through the secure supply of high quality Saudi crude oil, and by making available Saudi Aramco's 70 years of experience in crude oil production and 60 years in the refining business.
Saudi Aramco currently supplies nearly 1 million barrels per day of crude oil to Japan.
"One way to reinforce Saudi Aramco's commitment to Japan is by investing in the Japanese refining and marketing industry," said Abdullah Jum'ah, the president of Aramco. "Saudi Aramco's world-class upstream capabilities, as well as our 60 years of refining experience, will generate significant synergy with Showa Shell's strength as a petroleum refining and marketing company in Japan. Saudi Aramco also has a long history of successful business alliances with international partners in North America, Europe, the Middle East and the Far East. Mutually beneficial joint ventures have become one of Saudi Aramco's greatest strengths."
The new partnership with Showa Shell also builds on the growing relationship between Saudi Aramco and Royal Dutch/Shell Group. Saudi Aramco and Royal Dutch/Shell currently have partnerships in the U.S. and Saudi Arabia.
In relation to this transaction, HSBC Bank plc acted as sole financial advisor to Saudi Aramco. (menareport.com)
© 2004 Mena Report (www.menareport.com)
