RIYADH: Saudi Aramco, the world’s top crude exporter, signed a $12.4 billion deal on Friday with a group of investors led by EIG Global Energy Partners (EIG) that gives the consortium a 49 per cent stake in a newly formed oil pipeline venture.
The agreement, which aims to monetise the assets of the state-oil giant, is its largest since the company’s 2019 listing on the Tadawul exchange that raised over $29bn, report agencies.A newly formed Aramco subsidiary, Aramco Oil Pipelines Company, will lease usage rights in Aramco’s stabilised crude oil pipelines network, which connect oilfields to the downstream network, for a 25-year period, the company said in a statement. Aramco Oil Pipelines Company will receive a tariff payable by Aramco for the oil that flows through the network, backed by minimum volume commitments.
Aramco will hold a 51 per cent majority stake in the new company, with the remaining 49 per cent stake held by the EIG-led group. Aramco will continue to retain full ownership and operational control of its stabilised crude oil pipeline network. The deal indicates a total equity value of about $25.3bn of Aramco Oil Pipelines, according to a statement from EIG.
Aramco will at all times retain title to and operational control of the pipeline network and will assume all operating and capital expense risk. The transaction will not impose any restrictions on Aramco’s actual crude oil production volumes.
“This landmark transaction defines the way forward for our portfolio optimisation programme. We are capitalising on new opportunities that also align strategically with the kingdom’s recently-launched Shareek programme,” Aramco president and chief executive Amin Nasser, said.
“Aramco’s strong capital structure will be further enhanced with this transaction, which in turn will help maximise returns for our shareholders ... moving forward, we will continue to explore opportunities that underpin our strategy of long-term value creation.”
Washington-based EIG’s chief executive Robert Blair Thomas said the deal “aligns perfectly with EIG’s philosophy of investing in high-quality assets with contracted cash flows in critical infrastructure.”EIG, which invests in energy and energy-related infrastructure around the world, has $22bn in energy-related assets globally.
Aramco did not name the other companies in the EIG-led group. The oil giant’s deal will help Saudi Arabia pump billions of dollars into its economy as it seeks develop various mega projects, build up its tourism sector, nurture local non-oil industries and boost jobs. Non-oil revenue accounted for about half of Saudi Arabia’s total revenue in 2020.
The kingdom’s sovereign wealth fund, the Public Investment Fund, plans to double its assets to $1.07 trillion and invest a minimum of $40bn a year into the domestic economy until 2025 and create 1.8 million jobs.