Aramco to buy 100% stake in Chile’s fuel retailer Esmax to bolster downstream expansion

The deal enables world's largest oil exporting company to enter South American fuels and lubricants retail market

At the signing ceremony, front row, from left, Southern Cross group partner Raul Sotomayor and acting president of Aramco Europe Mansour Al Turki. Back row, from left, Southern Cross group partner JaiShow more

Saudi Aramco, the world’s largest oilexporting company, has agreed to buy a 100 per cent equity stake in Esmax Distribuscion, a downstream fuels and lubricants retailer in Chile, from private equity company Southern Cross Group.

The value of the deal was not disclosed.

“Aramco’s planned acquisition of Esmax would be its first downstream retail investment in South America, recognising the potential and attractiveness of these markets while advancing Aramco’s strategy of strengthening its downstream value chain,” Aramco said in a statement on Friday.

The transaction is subject to certain customary conditions, including regulatory approvals, it added.

Esmax’s businesses include retail fuel stations, airport operations, fuel distribution terminals and a lubricant blending plant.

Aramco said this deal would enable it to “secure outlets for its refined products and help expand its retail business internationally”.

The acquisition would also further unlock new market opportunities for Valvoline branded lubricants, following Aramco’s acquisition of the Valvoline global products business in February 2023, the company added.

This agreement “creates a platform to launch the Aramco brand both in Chile and South America more broadly, unlocking significant potential to capitalise on new markets for our products”, Mohammed Al Qahtani, Aramco downstream president, said.

Aramco is third most valuable company in the world, with a market value of $2.08 trillion, behind Microsoft ($2.44 trillion) and Apple ($2.86 trillion) as of August 6. It is the second largest company by revenue behind Walmart, which has held the top position since 2014.

Last month, the company said its second-quarter net profit softened due to voluntary production cuts and lower crude prices, although the results were in line with analyst expectations.

Net profit after zakat for the three-month period to the end of June fell 38 per cent to about $30.1 billion, from its record $48.4 billion in the year-earlier period, the national oil company of Saudi Arabia said in a regulatory filing to the Tadawul stock exchange, where its shares are traded.

Net income for the second quarter of this year fell about 6 per cent from the first quarter of 2023.

Net income for the first half of the year fell nearly 30 per cent to $61.96 billion from the same period of 2022, due to lower crude oil prices and weakening refining and chemicals margins.

The company has been expanding its presence in vital markets globally.

This week, Saudi Aramco's venture capital arm Wa'ed Ventures and BOLD Capital Partners, a US-focused firm, led a $52 million funding raised by US-based Mighty Buildings, a 3D-printing construction technology firm.

In July, Saudi Aramco closed a deal to acquire a 10 per cent stake in Shenzhen-listed Rongsheng Petrochemical for $3.4 billion.

Four months earlier, a Saudi Aramco unit had acquired a 10 per cent stake in Rongsheng Petrochemical, in a deal valued at $3.6 billion that would “significantly” expand its refining operations in China.