Page 10 - MEOG Annual Review 2021

MEOG APRIL MEOG

Aramco seals oil

pipelines deal

A year of talks this week culminated in the leasing out of a 49% stake
in Aramco Oil Pipelines Co. to a consortium of investors for $12.4bn.

SAUDI ARABIA STATE-OWNED Saudi Aramco announced firm, the agreement will net the company more
this week that it has agreed a multi-billion-dol- than the $10.1bn Abu Dhabi National Oil Co.
lar deal with a group of investors to sell and lease (ADNOC) received in a similarly structured
WHAT: back a stake in its oil pipelines business. mid-2020 deal for a 49% share in its gas pipeline
Saudi Aramco has The consortium, led by EIG Global Energy subsidiary.
leased a minority stake Partners, will acquire a 49% stake in the newly Despite the draw of Aramco’s oil assets, the
in its new oil pipelines formed Aramco Oil Pipelines Co. subsidiary company sought to improve the deal’s attractive-
subsidiary in a move that for $12.4bn. Aramco Oil Pipelines has been ness by offering potential buyers a syndicated
shows the company’s accorded 25 years of rate payments for oil loan which would cover the majority of the lease
intention to monetise its transferred through the parent firm’s extensive fee.
assets in an effort to free in-kingdom network. In late March, Aramco sent a request for pro-
up cash. The announcement brings to an end nearly posals (RFP) to a pool of banks, with Bloomberg
a year of back-and-forth discussions about the sources suggesting that BNP Paribas, Citigroup,
WHY: potential deal, which at one point looked to HSBC Holdings and Mizuho Financial Group
Aramco has been have been derailed because of concerns about were all involved in providing around $10.5bn.
hamstrung by its perceived loss of control. As previously outlined Aramco was advised on the deal by JP Mor-
guaranteed $75bn by Middle East Oil & Gas (MEOG), Aramco gan and Moelis & Co. while HSBC Bank and
per year dividend will be granted exclusive rights to use, transport Latham & Watkins legal firm advised EIG.
commitment and it has through, operate and maintain the network. For In an official statement to press following the
been working on ways to this, it will pay a “quarterly, volume-based tariff, announcement, EIG’s CEO Robert Blair Thomas
cash in on infrastructure payable by Aramco”, according to EIG. This will said the deal “aligns perfectly with EIG’s philos-
much the same way as its be backed by minimum volume commitments ophy of investing in high-quality assets with
counterpart in Abu Dhabi. and Aramco will retain full ownership of the contracted cash flows in critical infrastructure”.
pipelines. The Washington-based company holds around
WHAT NEXT: $22bn of energy-related assets around the world.
The company may now Deal The other consortium members are yet to be
look to monetise other The deal values Aramco Oil Pipelines Co. at disclosed, but sources told Bloomberg that Abu
assets in order to allow around $25bn. Dhabi’s Mubadala Investment Co. is in talks to
its capital programme to Unsurprisingly given the company’s determi- take part. The Emirati wealth fund has around
return to pre-pandemic nation to be seen as the world’s top oil and energy $232nm of assets.
levels.

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