Saudi Aramco and the National Shipping Company of Saudi Arabia (Bahri) have signed a non-binding MoU to merge the fleets and operations of Bahri and Aramco subsidiary Vela International Marine Limited
The merger of ships, personnel and business systems from Vela and Bahri, along with management responsibility for Aramco?s very large crude carrier (VLCC) transportation system, would be implemented within the corporate structure of Bahri.
The agreement would also expand the ability of Aramco to meet future maritime transport needs for its expanding downstream businesses. The transaction would lead to Bahri becoming the exclusive provider of VLCC crude oil shipping services to Aramco under a long-term agreement and would take responsibility for maintaining reliable crude transportation.
The two companies plan to explore ways to expand their cooperation in the maritime sector. Under the terms of the proposed transaction, Bahri would pay Vela a total consideration of approximately US$1.3 billion.
Bahri would also become the fourth-largest owner of VLCCs globally and would operate a fleet of 77 vessels that would including 20 chemical tankers, five product tankers, four roll-on roll-offs (ROROs), 32 VLCCs and 16 vessels that are currently under construction.
The parties would work together to ensure a seamless integration of their operations. Aramco would continue to manage all crude oil marketing and sales directly with its customers, while Bahri would provide reliable transportation services to Aramco on commercial terms.
The MoU has been scheduled to expire when both parties sign a definitive agreement or by notice from either party to the other. The parties have said that they intend to work towards signing a definitive transaction documentation in Q4 2012 and to complete the transaction during the course of 2013.