Motiva split keeps Port Arthur crude status quo

OREANDA-NEWS. March 21, 2016. Shell and Saudi Aramco's planned split of the Motiva joint venture will not immediately shake up crude acquisition for more than 1.1mn b/d of US Gulf coast refining.

Shell Trading and Supply (STUSCO) will continue to supply non-Saudi crude to the 600,000 b/d Port Arthur, Texas, refinery "through and beyond deal completion" as both parties work out a definitive agreement, Shell said. Aramco did not respond to requests to comment.

"New agreements may be entered into following deal completion," Shell said.

Motiva took over more responsibility for gasoline and diesel trading from STUSCO in 2014 and began forming its own products trading desk last year as a STUSCO contract for the business expired. But a crude supply agreement had no such expiration.

The companies said this week they plan to split up their nearly 20-year-old joint venture, Motiva. Saudi Refining will through Motiva take full control of Port Arthur, the largest US refinery, which was recently upgraded and is perched on the Texas Gulf coast between pipelines delivering Canadian heavy crude and a growing products export business.

Port Arthur leans toward heavy crude processing and distillates production. Steady volumes of heavy Canadian, Venezuelan and Mexican crude have helped to fill the expanded refinery, based on an Argus assessment of public records.

Motiva will keep the bulk of the joint venture's terminal locations. The 26 facilities include mid-Atlantic, southeast and Texas sites.

Shell will take the joint venture's two Louisiana complexes. Both 225,000 b/d Norco and Convent refineries feature units more focused toward gasoline production. The Norco facility includes integrated chemicals units.

The combined sites have also featured a declining share of Saudi crude imports. Though still the largest single source of imported crude, based on Energy Information Administration data, Saudi imports faded from more than 100,000 b/d in 2013 to less than 50,000 b/d last year. Volumes did rise late last year as narrow differentials favored imports on the US Gulf coast.

Access to Colonial Pipeline, the constantly allocated 5,500-mile (8,851km) products system connecting the US Gulf coast to the New York Harbor market, would be worked out in the definitive agreement, Shell said. Shell's terminals under the initial outline of the deal include New Jersey and New York delivery points. Motiva terminals include several major southern points along the Colonial system, including Collins, Mississippi, Greensboro, North Carolina and Tennessee and Georgia facilities.