Saudi Aramco to acquire Chile’s Esmax Distribusción

Image courtesy: Saudi Aramco

Saudi Aramco, the world’s biggest oil producer, has agreed to acquire a 100 per cent equity stake in Esmax Distribusción (Esmax) from Southern Cross Group.

The state-energy firm said the transaction is subject to certain customary conditions, including regulatory approvals.

Esmax distributes Petrobas fuel in Chile. The transaction will give Aramco access to retail fuel stations, airport operations, fuel distribution terminals and a lubricant blending plant.

The deal is set to be Aramco’s first downstream retail investment in South America. The company said it recognises the potential and attractiveness of this market and the acquisition of Esmax will advance the company’s strategy of strengthening its downstream value chain.

As part of our ongoing Downstream growth strategy, we announce our agreement to acquire Esmax, a leading diversified downstream fuel and lubricant retailer in South America

Learn more ??https://t.co/Sp5eT8t5gm#aramco90th#aramco pic.twitter.com/zSpJ5RciM2

— aramco (@aramco) September 15, 2023

The transaction would enable the energy firm to secure outlets for its refined products and help expand its retail business internationally.

“This agreement is yet another milestone in our strategy to grow Aramco’s downstream presence globally and expand our retail, lubricants and trading businesses. We are excited by the opportunities it presents, creating synergies with our extensive trading and manufacturing systems,” said Mohammed Y. Al Qahtani, Aramco Downstream president.

The acquisition is also expected to further unlock new market opportunities for Valvoline branded lubricants, following the acquisition of the company’s global products business for $2.65bn in February 2023. The deal further boosted the world’s biggest oil firm’s base oil portfolio.

Al Qahtani said the acquisition of Esmax creates a platform to launch the Aramco brand both in Chile and South America while unlocking significant potential to capitalise on new markets for its products.

Saudi Aramco diversified portfolio

Meanwhile, Aramco is investing heavily in fuels and petrochemicals to diversify from crude oil sales, while tapping tap demand in new markets. The company said capital expenditures in H1 2023 were SAR72bn ($19.2bn). It is targeting capital expenditure of $45bn to $55bn for 2023.

Aramco purchased a stake in a 211,000 barrels-a-day refinery in Poland in January as it looks to take advantage of Europe’s pivot away from Russian energy supplies.

In July, the Dhahran-based firm also completed the SAR784bn acquisition of a 10 per cent stake in China’s oil refining giant Rongsheng Petrochemical (Rongsheng) through its subsidiary, Aramco Overseas Company.

The deal includes the supply of 480,000 barrels per day of Arabian crude oil to Rongsheng-controlled Zhejiang Petroleum and Chemical Company for 20 years.

Aramco raised its dividends to investors and Saudi Arabia’s government by more than half to $29.4bn, including a performance-linked portion, up from a regular dividend of $18.8bn a year ago. The company’s net income plunged by 29.5 per cent to SAR214.3bn compared to SAR278bn a year ago.

Read: Aramco reports a drop in profits of 38% in Q2 2023