Saudi Aramco may merge business units ahead of IPO

Ahead of potential IPO plans for its trading arm, Saudi Aramco is considering a merger between Aramco Trading Co and Motiva Trading, Reuters reported Thursday.

Citing two unnamed sources “familiar with the matter”, Reuters said the merger and restructuring of the two business arms could take place by the end of this year.

Motiva Trading is the trading arm of Motiva Enterprises, which owns the largest refinery in the United States, in Port Arthur, Texas. The refinery has a production capacity of 630,000 barrels per day.

In May 2017, Shell pulled out of Motiva Enterprises LLC for a $2.2 billion payment, including debt, from Saudi Aramco. The deal gave Saudi Aramco’s Saudi Refining unit full ownership of the Port Arthur refinery and the Motiva Enterprises name.

After posting $40 billion in profits on soaring oil prices, in mid-May Saudi Arabia announced it would go public with Aramco Trading as the IPO trend among Council oil companies Gulf Cooperation (GCC) is gaining momentum.

In May, Saudi Aramco regained its position as the world’s most valuable listed company, overtaking Apple. As of May 12, Saudi Aramco was worth approximately $2.43 billionexceeding Apple’s value at the time by $2.37 trillion, based on Refinitiv data.

Market analysts reported earlier this quarter that Aramco Trading could reach 30 billion dollars as the Saudis take advantage of high crude oil prices. Analysts believe Aramco would seek to sell around 30% of the commercial arm. A $30 billion price tag would make it one of the biggest IPOs of the year.

A month ago, the UAE’s state-owned Abu Dhabi National Oil Company (ADNOC) also announced that it was going public with its downstream giant. Petrochemical company Borouge, a joint venture between ADNOC and Austria’s Borealis, will sell a 10% of capital (i.e. 3 billion shares) in the context of an initial public offering, without indication of a price range.

By Charles Kennedy for Oilprice.com

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