Texaco Press Release - Federal Trade Commission Review Completion Permits Texaco, Shell
FOR IMMEDIATE RELEASE: WEDNESDAY, DECEMBER 19, 1997.
WHITE PLAINS, N.Y., Dec. 19- Texaco Inc., Shell Oil Company and Saudi Aramco today announced the completion of the review by the Federal Trade Commission (FTC) on the proposed alliance of their U.S. downstream operations.
The companies now have FTC approval to proceed with the formation of two ventures combining major elements of their U.S. refining, marketing, transportation, trading and lubricants operations.
Two limited liability operating companies will be established in different geographic regions of the U.S. One company, comprising the eastern and Gulf coast refining and marketing businesses of Texaco, Shell, and Saudi Refining, Inc. (a corporate affiliate of Saudi Aramco), will be owned 35 percent by Shell, 32.5 percent by Texaco and 32.5 percent by Saudi Refining, Inc. The second company will include Texaco's and Shell's midwestern and western refining and marketing operations along with their nationwide trading, transportation and lubricants businesses. Shell will have 56 percent ownership and Texaco will hold 44 percent of the second company.
Under the terms of a consent agreement accepted by the FTC and similar agreements with the attorneys general of California, Hawaii, Oregon and Washington, the western alliance will divest of Shell's Anacortes, Wash., refinery, certain combined marketing assets in southern California and Hawaii, and certain terminal and pipeline interests. No assets in the eastern alliance are affected by the agreements.
Shell and Texaco expect to close and begin operation of their joint venture involving their western refining and marketing assets and their nationwide trading, transportation, and lubricants businesses as soon as possible in the first quarter of 1998.
Texaco, Shell and Saudi Refining, Inc. are working together to finalize the approvals for their joint venture involving the eastern and Gulf Coast refining and marketing businesses. All three parties are optimistic that this transaction will be concluded as well in the first quarter of 1998.
"Today's announcement by the FTC is the result of cooperative negotiations on the part of the FTC, the companies and the attorneys general of the four states," said Texaco Chairman and CEO Peter I. Bijur, Shell Oil Company President and CEO Philip J. Carroll and Saudi Aramco President and CEO Abdallah S. Jum'ah, in a joint statement. "This combination of the three companies' assets will allow us to accomplish a fundamental change in the way we operate our downstream businesses, improve performance and create an environment to grow the business. Ultimately, the alliance will generate new opportunities for our customers, employees, vendors and the communities where we work and live.
"Notwithstanding the required asset divestitures, we believe that we will be able to achieve the objectives which are at the core of this alliance. The divestitures will be made with consideration for the concerns of the impacted employees and customers."
The new entities will market gasoline under both the Texaco and Shell brands. The exploration, production and chemical businesses of these companies are not included in the alliance.
Texaco Inc. is based in White Plains, N.Y. Shell Oil Company is a Houston-based affiliate of the Royal Dutch/Shell Group of Companies. Saudi Aramco is the state-owned oil company of the Kingdom of Saudi Arabia. The company's U.S. corporate affiliate Saudi Refining, Inc. is based in Houston.
Additional Information on Alliance Assets
Updated: December 1997