Saudi Aramco signs $12.4bn pipeline handle EIG-led group
11 April, 2021
Saudi Aramco signed a $12.4 billion package for the sales of a 49 per cent stake in a newly formed oil pipeline venture to a consortium led by Washington-based EIG Global Strength Partners.
The agreement is Aramco's greatest since its 2019 listing on the Tadawul exchange, when it raised a lot more than $29bn.
The new venture, Aramco Oil Pipelines Company, will lease consumption rights in the state oil company's stabilised crude oil pipeline network, which connects oilfields to the downstream network, for 25 years.
The subsidiary will get a tariff from Aramco for oil that flows through the network, backed by minimum volume commitments.
Aramco will hold a 51 % stake found in the venture, even though EIG will contain the remainder. EIG said the deal had a complete equity value around $25.3bn.
The world's top crude exporting company will retain title to and operational control of the pipeline network and can assume all risk regarding operating and capital expenses.
The transaction, which was signed on Friday, will not impose any restrictions on Aramco’s actual crude oil production volumes.
“This landmark transaction defines just how forward for our portfolio optimisation programme," said Aramco president and leader Amin Nasser.
"We will be capitalising on innovative opportunities that also align strategically with the kingdom’s recently-launched Shareek programme.
“Aramco’s solid capital structure will be further enhanced with this purchase, which in turn will help maximise returns for our shareholders ... Moving forward, we will continue to explore prospects that underpin our technique of long-term benefit creation.”
EIG chief executive Robert Blair Thomas stated the offer was aligned along with his company's “philosophy of investing in high-quality assets with contracted funds flows in significant infrastructure”.
EIG, which invests found in energy and energy-related infrastructure all over the world, has $22bn in assets worldwide.
Aramco did not name the others in the consortium.
The deal is likely to help the country's get to pump vast amounts of us dollars into its economy to develop various large projects, build-up the tourism sector, nurture native non-oil industries and boost job creation.
Non-oil earnings accounted for about 50 percent of Saudi Arabia’s total income this past year. The kingdom’s sovereign wealth fund, the general public Investment Fund, ideas to double its property to $1.07 trillion and invest a minimum of $40bn a year in the household economy until 2025, helping to create 1.8 million jobs.
It'll contribute $320bn to the kingdom’s non-oil market and plans to grow possessions under management to more than $2tn by 2030.
Aramco’s deal employs an identical agreement by Abu Dhabi National Essential oil Company, which was the most significant of its kind this past year.
Last June, Adnoc signed an contract worthwhile $20.7bn with a group of businesses that included the world’s leading infrastructure and sovereign wealth funds that will spend money on Abu Dhabi’s gas pipelines infrastructure.
The consortium will need a 49 per cent stake in Adnoc Gas Pipeline Assets, which includes the leasing rights to 38 pipelines for twenty years.
The pipeline network spans 982.3 kilometres and provides the company's gas to local clients in the UAE.
Aramco's senior vice president of corporate production Abdulaziz Al Gudaimi said the manage the EIG-led consortium would unlock benefit from the company's resources and bolster "its resilience, agility and capability to respond to changing market dynamics".
No timetable was presented with for the closing of the transaction, which is at the mercy of customary closing circumstances, including any required merger control and related approvals.
Upon closing, Aramco will receive upfront proceeds around $12.4bn.
Aramco produced 12.4 million barrels of oil equivalent per day last year, which crude accounted for 9.2 million bpd.
Previous month, Mr Nasser reported the company planned to undertake “detailed engineering” to raise its total production capacity to 13 million barrels each day.
Aramco reached a development capacity of 12.1 million bpd go on April - its highest so far - prior to the Opec+ alliance accepted a historic package to cut supply amid the Covid-19 pandemic.
The pandemic disrupted global trade and led to the deepest recession in the global economy since the Great Depression.
Source: www.thenationalnews.com
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