Saudi Aramco closes $15.5bn gas pipeline deal with BlackRock consortium

Consortium has acquired 49% stake in Aramco Gas Pipelines Company

Saudi Aramco's Fadhili Gas Plant Project, located 30 kilometres west of the city of Jubail in eastern Saudi Arabia. AFP

Saudi Aramco on Wednesday closed the $15.5 billion lease and leaseback deal for its gas pipeline that it agreed to in December with a group of companies led by BlackRock Real Assets and state-backed Hassana Investment Company.

The global consortium has acquired a 49 per cent stake in Aramco Gas Pipelines Company, a unit of the world’s biggest oil exporter, with Aramco retaining the 51 per cent majority stake as well as full ownership and operational control of the gas pipeline network, Aramco said in a statement.

As part of the 20-year agreement, Aramco Gas Pipelines Company will receive a tariff payable by Aramco for the specified gas products that flow through the network, backed by minimum commitments on throughput.

“This agreement is our second landmark infrastructure transaction in less than a year and another major step forward in our long-term value creation strategy,” said Amin Nasser, Aramco president and chief executive.

“As Aramco raises gas production and seeks new opportunities in low-carbon energy sources over the next decade, the importance of our energy infrastructure in relation to global energy security and reliability is expected to grow in significance.”

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Last year, Aramco closed a $12.4bn oil pipeline infrastructure deal with a consortium led by EIG Global Energy Partners, which was the company’s largest since its 2019 listing on the Tadawul exchange, when it raised more than $29bn.

Under that agreement, Aramco Oil Pipelines Company will lease usage rights in its stabilised crude oil pipeline network, which connects oilfields to the downstream network, for 25 years.

Aramco also signed a preliminary agreement with BlackRock on Wednesday to explore joint opportunities in future energy transition projects related to low-carbon energy infrastructure and enhancing opportunities for possible future collaborations.

“Getting to a net-zero world will not happen overnight,” said Larry Fink, chairman and chief executive of BlackRock.

“It requires us to shift the energy mix in incremental steps to achieve a green energy future. Bold, forward-thinking incumbents like Aramco have the technical expertise and capital to play a crucial role in this transformation, and we look forward to our future collaboration.”

The consortium for the gas pipeline transaction also comprises institutional investors such as Keppel Infrastructure Trust, Silk Road Fund and China Merchants Capital, among others, the statement said.

The latest deals are expected to help Saudi Arabia’s drive to pump billions of dollars into its economy to develop various large projects, build up the tourism sector, nurture local non-oil industries and boost job creation.

This month, Saudi Arabia transferred 4 per cent of Aramco shares to the kingdom’s sovereign wealth fund, known as the Public Investment Fund, to support restructuring the economy.

Updated: February 24, 2022, 5:41 AM