Saudi Aramco (TADAWUL: 2222) has announced that it has signed one of the world’s largest energy infrastructure deals.
The agreement, which will see Aramco receive upfront proceeds of around $12.4 billion upon closing, is with a consortium led by EIG Global Energy Partners to optimize Aramco’s assets through a lease-and-lease-back agreement involving its crude oil pipeline network, Aramco outlined.
As part of the deal, a newly formed Aramco subsidiary, Aramco Oil Pipelines Company, will lease usage rights in Aramco’s crude oil pipelines network for a 25-year period. In return, Aramco Oil Pipelines Company will receive a tariff payable by Aramco for the crude oil that flows through the network, backed by minimum volume commitments. Aramco will hold a 51 percent majority stake in the new company and the EIG-led consortium will hold a 49 percent stake, and Aramco will continue to retain full ownership and operational control of its crude oil pipeline network.
The transaction will not impose any restrictions on Aramco’s actual crude oil production volumes that are subject to production decisions issued by the Kingdom, Aramco noted. The company said the transaction represents a continuation of Aramco’s strategy to unlock the potential of its asset base and maximize value for its shareholders. It also reinforces Aramco’s role as a catalyst for attracting significant foreign investment into the Kingdom, Aramco added.
“This landmark transaction defines the way forward for our portfolio optimization program,” Aramco President and Chief Executive Officer, Amin H. Nasser, said in a company statement.
“We are capitalizing on new opportunities that also align strategically with the Kingdom’s recently-launched Shareek program. Aramco’s strong capital structure will be further enhanced with this transaction, which in turn will help maximize returns for our shareholders,” he added.
“Additionally, our long-term partners in this venture will benefit from investment in one of the world’s most robust energy infrastructures. Moving forward, we will continue to explore opportunities that underpin our strategy of long-term value creation,” he continued.
R. Blair Thomas, EIG’s chairman and chief executive officer, said, “we are honored to partner with Aramco, an undisputed industry leader, on this landmark transaction”.
“Aramco’s oil pipeline network is a marquee global infrastructure asset. We look forward to investing in this infrastructure which is critical to the global economy, and to driving value for our institutional investors worldwide,” Thomas added.
Aramco is a leading producer of the energy and chemicals that drive global commerce, its website states. The company manages the Kingdom’s proved reserves of 336.7 billion barrels of oil equivalent and employs 79,000 people, its website shows.
To contact the author, email andreas.exarheas@rigzone.com
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