Page 8 - DMEA Week 23 2021

DMEA FINANCE & INVESTMENT DMEA

Mubadala joins EIG in

Aramco pipeline consortium

MIDDLE EAST ABU Dhabi’s Mubadala Investment Co. this a $250mn project to increase capacity from 5mn
week announced that it has joined a consortium barrels per day (bpd) to 7mn bpd.
that agreed in April to acquire a minority stake in At various points over the past two years, the
Saudi Aramco’s oil pipelines division. use of drag-reducing agents and “interim con-
The consortium led by US-based EIG Global version of NGL pipelines” allowed for a “tempo-
Energy Partners signed a $12.4bn deal with rary mechanical capacity increase” to reach the
Aramco to lease and lease back a 49% stake in upper limit for short periods, however, during
the newly formed Aramco Oil Pipelines Co. 2018 and 2019, flows averaged 2.1mn bpd.
(AOPC) for a duration of 25 years. Mubadala The conduit is vital for Aramco as it trans-
has not disclosed the size of stake it holds in the ports crude from the Abqaiq processing hub in
consortium nor the level of investment. the oil-rich Eastern Province to refineries and
Shortly after the deal was agreed, reports export terminals at Yanbu’ on the Red Sea Coast
emerged suggesting that EIG was in talks to sell and completion of the expansion project is tar-
part of the $1.9bn equity portion of the deal to geted in December 2021.
potential buyers including Mubadala, Chinese EWP was targeted by Yemen’s Houthi rebels
investors which could include China Investment in 2019 when the militants launched drone
Corp. (CIC), Emirati and Saudi pension funds strikes on that disabled the Abqaiq plant and the
and a US pension fund. Khurais oilfield, taking around 5.7mn bpd off
Meanwhile, Reuters quoted well-placed the market.
sources as saying that the EIG-led consortium More recent attacks have focused on export
will issue bonds in three tranches between Q1 infrastructure throughout the Kingdom. It
2022 and early 2024 to replace the $10.5bn in sta- is worth noting that Aramco has assumed all
ple financing arranged by Aramco to fund the operating and capital expense risk relating to the
deal when it reached out to banks including BNP operation of the pipeline network.
Paribas, Citigroup, HSBC Holdings and Mizuho
Financial Group in March. Green light in Brazil
Under the pipeline deal, the Saudi firm will Brazilian national competition regulator this
be granted exclusive rights to use, transport week approved Petrobras’ sale of the Landulpho
through, operate and maintain the extensive Alves Refinery (RLAM) and its related logistics
network. For this, it will pay a “quarterly, vol- assets to Mubadala Capital.
ume-based tariff, payable by Aramco”, according A $1.65bn was agreed between the parties
to EIG. This will be backed by minimum volume in late March for the 323,000-bpd Bahia unit,
commitments and Aramco will retain full own- which is the first to be sold of eight refineries
ership of the pipelines. put up for sale by the Brazilian NOC. The total
AOPC’s key asset is the massive East-West capacity of the facilities marketed by Petrobras
Pipeline (EWP), which is currently undergoing is 1.15mn bpd.™

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