SAUDIS MAY TAKE TOTAL DOWNSTREAM STAKE

Saudi Aramco Oil Co. has started negotiations to acquire an interest in Total Cie. Francaise des Petroles's refining and marketing operations in Europe. A spokeswoman for Total, Paris, company said talks are at a very preliminary stage. Negotiations could lead to some kind of downstream joint venture.

March 25, 1991

2 min read

Saudi Aramco Oil Co. has started negotiations to acquire an interest in Total Cie. Francaise des Petroles's refining and marketing operations in Europe.

A spokeswoman for Total, Paris, company said talks are at a very preliminary stage. Negotiations could lead to some kind of downstream joint venture.

Industry sources say Total and the Saudis are discussing a joint venture that would make give Saudi Arabia a substantial stake in the French market, where Total is the market leader. Saudi Arabia might also gain a smaller interest in other European countries in which Total has downstream operations.

Preliminary talks are under way at the same time Dow Chemical Co. is reported to be interested in selling its 45% holding in NV's 150,000 b/d refinery at Vlissingen, Netherlands. Total holds the remaining 55% stake in Total Raffinaderij and a 100% interest in some of the upgrading units in plant.

Total says it is happy with the current association and does not want to increase its interest in the plant. But it would welcome another partner if Dow pulled out.

The excursion into Europe follows Saudi Aramco's successful entry into the U.S. downstream market through Aramco Service Co.'s 50-50 venture with Texaco Inc. covering Texaco's refining and marketing assets in 23 eastern and Gulf Coast states.

Talks with the most powerful crude supplier in the world, Saudi Arabia, fit in with Total Pres. Serge Tchuruk's policy of forming alliances with companies from the main oil and gas exporting countries. Among other things, Tchuruk is preparing his company for uncertain market conditions of the 1990s (OGJ, Feb. 25, p. 15).

Total and the other major French oil company, Ste. Nationale Elf Aquitaine, have during a number of years been the subject of speculation they were negotiating to give producing countries a toe hold in their European downstream operations.

Nothing concrete has emerged from the reported talks. Abu Dhabi Investment Authority has taken a 7% interest in Total, which is a major player in the oil and gas industry in the emirate.