Page 16 - MEOG Week 13 2021

MEOG PIPELINES & TRANSPORT MEOG

Aramco asks banks to

finance pipeline deal

SAUDI ARABIA STATE-OWNED Saudi Aramco is reported to improved liquidity in the banking sector and an
have sent a request for proposals (RFP) to a pool appetite for deals.
of banks for funding that it intends to provide to BlackRock, Brookfield Asset Management,
companies considering leasing a stake in its oil KKR & Co. Apollo Global Management and
pipelines division. Sources working on the deal Chinese state-backed Silk Road Fund Co. and
told Reuters this week that the RFP was sent to China Investment Corp. have all been reported
Aramco’s ‘relationship banks’, those that have as potential bidders.
previously provided lending to the company. Meanwhile, negotiations are also understood
They added that the financing could be worth to have been carried out between Aramco and a
up to $10bn, putting it on a par with the $10.1bn group of local banks including Al-Ahli NCB, Al
Abu Dhabi National Oil Co. (ADNOC) received Rajhi, Riyad and Samba. These banks are likely to
from a consortium in June 2020 in exchange be among those who received the RFP.
for leasing out a 49% share in the ADNOC Gas The state oil giant has enjoyed a new-found
Pipelines and significantly more than the $4.9bn relationship with debt markets over the past year
BlackRock and KKR spent on leasing a 40% stake or two, taking out $18bn in to cover part of its
in ADNOC Oil Pipelines months earlier. $69bn acquisition of a majority stake in Saudi
Aramco is being advised by JPMorgan and Basic Industries Corp. (SABIC) and to maintain
Japan’s MUFG on the novel deal, dubbed inter- its ongoing $18.75bn per quarter dividend com-
nally ‘Project Seek’, which would see the com- mitment to shareholders.
pany provide financing to buyers to fund the Aramco’s oil pipelines include the mas-
lease of the stake in the pipeline business. sive East-West Pipeline that is currently being
Reuters’ sources said that the pricing and term upgraded to raise capacity from 5mn to 7mn
proposed by Aramco were aggressive, reflecting barrels per day (bpd).™

POLICY

Iran signs 25-year pact with China

IRAN IRAN and China last week signed a 25-year conditions of the day and it will be permanent
strategic accord covering bilateral trade, energy, and strategic.”
infrastructure and military co-operation. Oil With the deal now in place, Tehran and Bei-
and gas will play a major role in the deal, which jing will work together to increase bilateral trade
has been in the works since 2016. by more than 10-fold to $600bn within the next
The $400bn agreement was signed in Tehran decade.
on March 27 between Iranian Foreign Minister Despite years of frustration caused by Chi-
Mohammad Javad Zarif and China’s Foreign nese companies dragging their feet on major
Minister Wang Yi, with Iranian President Has- oilfield developments, Iran is likely to welcome
san Rouhani thanking the Chinese delegation these firms back to proceedings following the
for standing up to “American unilateralism”. deeper disappointment caused by the failure
Ali Larijani, former speaker of the Iranian of the Joint Comprehensive Plan of Action
parliament and potential presidential candidate, (JCPOA) to bring much-needed investment to
was instrumental to the deal and represented the sector.
Supreme Leader Ali Hosseini Khamenei in China is believed to be preparing to pump
discussions. $200-300bn into oil & gas and petrochemicals
Ahead of the signing, Larijani said that Iran development over the next five years, with Chi-
would not be influenced by temporary external nese firms to be given the option to bid to bid on
factors. “The Islamic Republic of Iran decides any new, stalled or abandoned projects. OilPrice
independently about its relationship with coun- quoted Iranian sources as saying that China
tries and it is not like certain countries to change would also be given the option to purchase all oil,
its position with a telephone call,” he said. gas and petchem products at up to 32% discount
Meanwhile, Wang noted that “China’s to the six-month rolling average when consider-
relationship with Iran will not be affected by ing risk and choice of currency.™

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