Posted on July 22, 2021
The Houston subsidiary of Saudi Arabia’s national oil company has halted its plan to invest $6.6 billion in its Port Arthur refinery aimed at expanding into the petrochemical business, the Wall Street Journal reported Monday.
The move follows a decision by Saudi Aramco, which owns Motiva Enterprises, to review its plans to expand at home and abroad amid sharply falling oil demand and prices amid the pandemic and an annual dividend burden of $75 billion that it assumed as part of its December 2019 initial public offering, according to the Wall Street Journal.
Aramco’s review comes after its 2019 initial public offering, valuing the company at $1.7 trillion, left the company with a $75 billion annual dividend commitment to investors.
Ahead of the IPO, Aramco entered an agreement to pay $69 billion to buy a controlling stake in Saudi Basic Industries Corp., the kingdom’s biggest petrochemicals company.
Aramco has borrowed heavily in public debt markets to finance those commitments, according to the Wall Street Journal.
Aramco took full ownership of Motiva and its Port Arthur refinery in 2017 from its joint-venture partner Royal Dutch Shell PLC.
The $6.6 billion expansion would build two new petrochemical plants in addition to its existing 630,000-barrels-a-day Port Arthur refinery.
Aramco now plans to invest nearly all of its $35 billion capital expenditure budget this year on increasing its oil and natural-gas production, according to the Wall Street Journal.
Plans are shelved for now, but could be back on the table in as soon as a year, the Wall Street Journal reported.
Motiva on Monday told the Houston Chronicle it “does not comment on market rumors or speculation.”
