The Saudi Arabian Oil Company (Saudi Aramco) today announced the signing of a memorandum of understanding with Shell Oil Company and with Texaco Incorporated to form a new three-partner joint venture combining their oil refining and marketing businesses in the eastern part of the United States. The new company will market gasoline and other refined products under both the Shell and the Texaco brand name through existing outlets. None of the exploration, production, or petrochemical activities of the three companies are, however, part of the new joint venture.
Currently, Texaco brand products are sold in a number of [Mexican] Gulf and eastern seaboard states by Star Enterprise, a fifty/fifty joint venture between subsidiaries of Texaco and Saudi Aramco. Earlier this year, Texaco and Shell signed a memorandum of understanding to combine substantially all of their western and midwestern U.S. refining and marketing activities. Saudi Aramco's initial ownership interest in the new eastern region company will be 32.5 percent, with 32.5 percent held by Texaco and 35 percent by Shell, subject to adjustment in future based on earnings contributions of the assets of each of the companies.
A joint statement by Saudi Aramco President and Chief Executive Officer Abdullah Jumah and the CEOs of Shell and Texaco attests to their belief that this amalgamation of their assets will lead to improved customer service, performance and growth. Under the new arrangements, Star Enterprise will be dissolved, but its existing regional refining and marketing operations will continue, benefiting from management shared equally by the three partners, to produce greater profitability. Consolidating Shell and Star in the eastern region will create one of the largest refining and marketing networks in the United States, with 16,500 retail service stations, company-owned and independent; 56 terminals for product distribution; and four refineries with a combined capacity of 820,000 barrels per day.
Saudi Aramco will supply the bulk of the crude oil, currently about 600,000 barrels per day processed at the existing three refineries of Star Enterprise. Saudi Aramco is the world's largest oil-producing company, with integrated operations in exploration, production, refining and marketing. In addition to its interests in Star Enterprise, it holds substantial equity in oil companies in the Republic of Korea, the Philippines, and Greece.