Saudi Arabian Marketing & Refining Co. (Samarec) will be merged into Saudi Arabian Oil Co. (Aramco) to form the world's largest integrated oil company.
Both are owned 100% by the Saudi government.
Aramco is the world's largest oil producer, with current output of 8 million b/d. Current productive capacity is said to be about 9 million b/d, although plans call for this to be increased to 10 million b/d by 1995.
Samarec's net refining capacity is about 850,000 b/d with three plants at Jeddah, Riyadh, and Yanbu. Next year, a $2-3 billion first phase of upgrading will begin to increase middle distillates output from the three refineries. This is scheduled for completion in 1997. Aramco runs the Ras Tanura refinery, with an obsolete 300,000 b/d hydroskimmer. The merger and later upgrades will take total Aramco refining capacity to about 1.5 million b/d, including foreign interests.
The merger was pushed by Saudi Oil Minister Hisham Nazer, said a ministry official, in a bid to streamline the country's oil industry. No date was announced for the merger as of presstime last week. However, Saudi Gazette quoted one government source as saying the changes took immediate effect.
Petromin Lubricating Oil Co., a Samarec holding company, has joint ventures with Mobil Corp. at the 250,000 bd Yanbu refinery and Shell International Petroleum Co. Ltd. at the 300,000 b/d Jubail refinery.
A joint venture of Samarec and the Greek company Petrola Hellas SA operates the 380,000 b/d Rabigh refinery. The three joint ventures will be excluded from the merger, Shell said. Petromin will represent Saudi interests in the three joint ventures.
Saudi newspaper Arab News was told the merger would not affect Samarec's 12,000 employees. They would be absorbed by Aramco.
First known as the Arabian American Oil Co., Aramco, the company was created 60 years ago after Standard Oil of California was awarded the right to explore for oil. After several revisions of the original concession agreement, the government acquired 100% interest in Aramco, retroactive to 1976.
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