DHAHRAN – Saudi Aramco has signed a $ 15.5 billion lease and leaseback agreement for its pipeline system with a consortium led by BlackRock Real Assets and Hassana Investment Company, the investment management arm of the General Organization for Social Insurance (GOSI) in Saudi Arabia, in one of the largest energy infrastructure contracts in the world.
This represents significant progress in Aramco’s asset optimization program and is the second such infrastructure transaction by Aramco this year after the pipeline infrastructure deal closed earlier. in June 2021.
Upon completion of the pipeline transaction, Aramco will receive initial proceeds of $ 15.5 billion, further strengthening its balance sheet. The deal unleashes additional value from Aramco’s diverse asset base and has captured the interest of a wide range of investors around the world, underscoring the compelling investment opportunity.
As part of the transaction, a newly formed subsidiary, Aramco Gas Pipelines Company, will lease the rights to use Aramco’s gas pipeline network and re-lease them to Aramco for a period of 20 years. In return, Aramco Gas Pipelines Company will receive a tariff payable by Aramco for gas products that will pass through the network, backed by minimum throughput commitments. Aramco will own a controlling 51% stake in Aramco Gas Pipeline Company and sell a 49% stake to investors led by BlackRock and Hassana.
Aramco will continue to retain full ownership and operational control of its pipeline system and the transaction will not impose any restrictions on Aramco’s production volumes. Aramco is fully committed to sustainable practices and is an industry leader in reducing greenhouse gas emissions, which are among the lowest in the industry.
Amin H. Nasser, President and CEO of Aramco, said: âToday we took another major step in our portfolio optimization program as we move towards a larger gas business and stronger. This further underscores our commitment to create long-term value for our shareholders, while bringing in BlackRock and Hassana as partners demonstrates our unique value proposition and ability to attract leading global investors to Saudi Arabia. . With gas expected to play a key role in the global transition to a more sustainable energy future, our partners will benefit from an agreement linked to a world-class gas infrastructure asset.
The announcement follows a $ 12.4 billion lease and sale-leaseback transaction in June with a consortium led by EIG Global Energy Partners, which involved Aramco’s stabilized crude oil pipeline system.
Abdulaziz M. Al Gudaimi, Senior Vice President of Aramco Business Development, said, âOur pipeline assets are critical and growing, and strongly integrated with the rest of Aramco’s oil and gas facilities. We are happy to complete the second transaction, looking for long term partners who understand and value the industry. This transaction represents the largest energy infrastructure transaction in the region to date and illustrates Aramco’s unique positioning as a partner of leading global institutional investors.
Larry Fink, President and CEO of BlackRock, said: âBlackRock is delighted to be working with Saudi Aramco and Hassana on this landmark transaction for Saudi Arabia’s infrastructure. Aramco and Saudi Arabia are taking significant and forward-looking steps to move the Saudi economy towards renewable energy, clean hydrogen and a net zero future. Responsibly managed natural gas infrastructure has an important role to play in this transition.
Saad Al-Fadly, CEO of Hassana Investment Company, added: âHassana is delighted to be a part of this landmark transaction and associated world-class assets. value for GOSI and further strengthen our lasting partnerships with strong and reputable players such as Aramco and BlackRock.
Mark Florian, Managing Director of BlackRock Real Assets, said: âWe look forward to partnering with Aramco and leading the equity consortium in this transaction involving Aramco’s gas pipeline network. The highly contracted nature of this investment is at the heart of our investment philosophy and represents an attractive opportunity for our clients who are looking to diversify their portfolio through infrastructure.
The pipeline transaction is expected to close as soon as possible, subject to customary closing conditions, including any required merger control and related approvals. – SG