Mubadala takes stake in Aramco pipelines venture

Abu Dhabi sovereign fund joins Washington-based GIC in $12.4bn purchase of a 49% stake in Aramco Oil Pipelines

Oil pipelines at Aramco’s Ras Tanura refinery in Saudi Arabia. Aramco's deal with the EIG-led consortium values its pipeline business at $25.3 billion. Bloomberg

Abu Dhabi’s sovereign fund Mubadala confirmed it has joined the consortium that took a significant minority stake in an oil pipeline venture with Saudi Aramco.

Aramco announced a $12.4 billion deal in April for the sale of a 49 per cent stake in a newly created vehicle known as Aramco Oil  Pipelines. The buyer was a consortium led by Washington-based investor EIG, an investor in energy-related infrastructure.

Mubadala “has joined the EIG-led consortium which has entered into a transaction with Saudi Arabian Oil Company [Aramco] to acquire a 49 per cent equity stake in the newly formed entity Aramco Oil Pipelines Company. Aramco will retain the remaining 51 per cent stake in the new entity,” a company representative said in a statement.

“The new entity has rights to 25 years of tariff payments for oil transported through Aramco’s stabilised crude oil infrastructure network, backed by minimum volume commitments.”

The deal allows Aramco, the world’s third-most valuable company, to monetise its pipeline assets while retaining overall ownership and operational control of the network. It does not impose any restrictions on Aramco’s crude oil production volumes, which are set by the kingdom itself, the Mubadala representative said.

Aramco, which made a profit of 183.7bn Saudi riyals ($49bn) in 2020, said earlier this week it also plans to tap debt capital markets through the issue of dollar-denominated sukuk. It did not disclose how much it plans to raise, but said the funds raised would be used “for general corporate purposes or for any other purpose specified” in the offer documents for the sukuk.

Speaking at the time EIG’s investment was announced in April, Aramco’s president and chief executive Amin Nasser described it as a landmark deal that “defines the way forward for our portfolio optimisation programme”.

Aramco’s monetisation of its pipeline network follows similar initiatives taken by Abu Dhabi National Oil Company in recent years.

Adnoc completed a $20.7bn deal with a consortium of infrastructure and sovereign funds to buy a stake in its natural gas pipelines in July last year. This followed a $5bn investment in the company's oil pipelines from other investors in 2019.

Adnoc also raised $2.7bn by monetising future rents from some of its non-core property assets in September last year through a vehicle known as Abu Dhabi Property Leasing Holding Company. Apollo Global Management took a 49 per cent stake in the company, valuing it at $5.5bn.