Page 7 - MEOG Week 33 2021

MEOG FINANCE & INVESTMENT MEOG
Aramco looks to beat oil pipe deal with gas line lease
SAUDI ARABIA
REPORTS emerged this week suggesting that Saudi Aramco is seeking to significantly improve upon the $12.4bn it achieved with its oil pipelines when it inks a similar deal focused on its network of gas conduits.
Sources close to proceedings were quoted by Reuters as saying that the company has a target of raising at least $17bn when it leases out a stake in the anticipated Aramco Gas Pipelines Co. (AGPC).
The firm is seeking to replicate the success achieved when it closed the April deal for a con- sortium led by EIG Global Partners to acquire a 49% stake in Aramco Oil Pipelines Co. (AOPC) for a duration of 25 years.
Under that deal, the Saudi firm will be liable for all maintenance and to make rate payments for crude transferred through the extensive pipe- line network. The gas pipeline deal will be a “copy paste” of the oil network arrangement.
As it did for the AOPC deal, Reuters’ sources said that Aramco has – through advi- sors – approached potential bidders including state-backed Chinese and South Korean funds as well as North American private equity and infrastructure funds. The formal sale process is expected to begin in the next month.
Several of those believed to have been approached by Aramco’s advisors were in the running either for the oil pipelines deal or one or both of similar oil and gas pipeline deals by Abu Dhabi National Oil Co. (ADNOC) which served as the blueprint for Aramco’s effort.
One source said that the deal may comprise around $3.5bn of equity with the remainder made up of bank debt, while another said the
deal could surpass $20bn in value.
Aramco’s Master Gas System network has a
total current capacity of 9.6bn cubic feet (272mn cubic metres) per day following expansion in 2017 and 2018.
An additional expansion phase was due to be completed in 2019 taking total capacity to 12.5 bcf (354 mcm) per day through an additional 1,600km of pipelines to increase gas supplies to the Red Sea coast.
However, articles on the Aramco website in October 2020 said that the “next phase” remained under construction, noting the addi- tion of 821km of new pipelines, just over half the amount expected when it released its 2017 annual report.
According to Aramco, “the total length [of] pipeline in service, ready for commissioning, or decommissioned, is 3,850km, and pipe- lines under construction totals an additional 1,075km”. One of Reuters’ sources said: “The gas deal is about the long-term view of gas utilisation and consumption in Saudi Arabia.” ™
Week 33 18•August•2021 w w w . N E W S B A S E . c o m
P7