Saudi Aramco acquires Valvoline in downstream push

Saudi Aramco, the world's largest oil-exporting company, acquired US lubricants manufacturer Valvoline Aug. 1 as it looks to achieve greater market share in the downstream and allied distribution businesses.

Valvoline was acquired for $2.65 billion, with the transaction subject to regulatory requirements.

Kentucky-based Valvoline sells lubricants and other automotive and engine maintenance products primarily to automotive retailers, installers and original equipment manufacturers.

The transaction follows Aramco's move to diversify its business from the direct sale of crude into more complex high-value products geared towards the East Asian market.

The company has invested heavily in expanding its downstream sector domestically and is also pursuing a number of opportunities abroad, particularly in integrated refining and chemicals.

The latest acquisition will "complement Aramco's line of premium branded lubricant products, optimize its global base oils production capabilities," the company said in a statement.

Valvoline will focus on its retail services segment following the acquisition by Aramco, the statement added.

Chemicals focus

Saudi Aramco is also allocating a significant amount of its crude for conversion into high value chemicals, and aims to quadruple its currently capacity to reach 4 million b/d by 2030.

Aramco's current oil-to-chemicals capacity will also include assets under local chemicals manufacturer SABIC, which it acquired in 2020.

The company is considering a number of opportunities with China's state-backed Sinopec and is still in discussions with India's Reliance on a possible joint venture as the world's largest oil company is looking to further diversify downstream, its chief executive and president Amin Nasser told investors during a quarterly earnings call in March.