Page 7 - MEOG Week 02 2022

MEOG FINANCE & INVESTMENT MEOG

AOPC investors seek help

refinancing pipeline loan

SAUDI ARABIA A group of investors that last April leased a 49% EIG is joined in its consortium by China’s Silk
stake in Saudi Aramco’s oil pipeline business has Road Fund, Samsung Asset Management and
hired Citi and JPMorgan to help it refinance a Hassana – the investment management arm of
loan arranged to support the deal. the kingdom’s General Organisation of Social
The American banks have already begun Insurance (GOSI). It owns an 89.45% stake in
investor calls on behalf of EIG Pearl Holdings, EIG Pearl Holdings, with Mubadala holding the
which is comprised of a consortium led by remainder.
US-based investor EIG Global Partners and Abu AOPC’s key asset is the massive East-West
Dhabi sovereign fund Mubadala. Pipeline (EWP), which is currently undergoing
In April 2021, the parties leased a 49% stake a $250mn project to raise capacity from 5mn
in Aramco Oil Pipelines Co. (AOPC) for a dura- barrels per day to 7mn bpd.
tion of 25 years under a $12.4bn deal. The agree- At various points over the past two years the
ment pertains to a portfolio of the Kingdom’s 44 use of drag-reducing agents and “interim con-
crude oil pipelines running more than 4,000 km. version of NGL pipelines” allowed for a “tempo-
Usage rights are then leased back to Aramco on rary mechanical capacity increase” to reach the
an exclusive basis on a transportation, operations upper limit for short periods; however, during
and maintenance agreement (TOMA). Aramco 2018 and 2019 flows averaged 2.1mn bpd.
will retain full ownership of the pipelines. The conduit is vital for Aramco as it trans-
For this, it will pay a “quarterly, volume-based ports crude from the Abqaiq processing hub
tariff”. This comprises a minimum volume com- in the oil-rich Eastern Province to refineries
mitment (MVC) of 75% of forecast production, and export terminals at Yanbu’ on the Red Sea
a $0.4546 merchant component and a carry for- Coast, and completion of the expansion project
ward carry back (CFCB) component. The tariff had been targeted for December 2021.
has a fixed escalation of 2% per year. That month, Aramco closed a $15.5bn, sim-
Citi was one of a group of 18 banks that ilarly structured deal with BlackRock and Has-
arranged $10.8bn of staple financing for EIG sana to lease a 49% stake in the new Aramco Gas
Pearl Holdings on behalf of Aramco along with Pipeline Co. (AGPC). The firm’s assets comprise
BNP Paribas, HSBC Holdings, Mizuho Finan- the Master Gas System (MGS) which transports
cial Group and First Abu Dhabi Bank. Accord- gas from the reserve-rich Eastern Province to
ing to bank documents, EIG Pearl Holdings will population hubs in Central and Western areas.
seek to refinance part of the loan in two or three The MGS network has a total current capacity
tranches. of 9.6bn cubic feet (272mn cubic metres) per day
The documents said that the first tranche will following expansion in 2017 and 2018. An addi-
have a 14.5-15-year maturity, with the second tional expansion phase was due to be completed
being 24.5-25 years. The first of these is expected in 2019, taking total capacity to 12.5 bcf (354
to be valued in excess of $4bn. The issuance fol- mcm) per day through an additional 1,600 km
lows reports of such a move in September last of pipelines to increase gas supplies to the Red
year. Sea coast.™

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