Page 4 - MEOG Week 49 2021

MEOG COMMENTARY MEOG

Aramco closes

gas pipelines deal

Aramco has executed its second major asset monetisation deal,
securing $15.5bn up front for the lease of its gas pipeline network.

SAUDI ARABIA SAUDI Aramco this week closed a highly antic- Aramco’s president and CEO Amin Nasser
ipated deal to lease and lease back a minority said: “With gas expected to play a key role in the
share in the Kingdom’s gas pipeline network, global transition to a more sustainable energy
WHAT: beating the valuation achieved for its oil network future, our partners will benefit from a deal tied
BlackRock and Hassana in the process. to a world-class gas infrastructure asset.”
have acquired a 49% The transaction is Aramco’s second in what Meanwhile, having recently urged investors
stake in Aramco’s gas is expected to be a string of asset monetisation to back sustainable stocks, BlackRock’s chairman
pipeline business for the deals, following the lead of regional rival Abu and CEO Larry Fink said: “Aramco and Saudi
next 20 years. Dhabi National Oil Co. (ADNOC). The Saudi Arabia are taking meaningful, forward-looking
firm said that the deal “unlocks additional value steps to transition the Saudi economy toward
WHY: from Aramco’s diverse asset base”, noting that renewables, clean hydrogen and a net zero
The firms will lease the the “compelling investment opportunity” had future. Responsibly managed natural gas infra-
network back for a tariff, attracted significant interest from a global pool structure has a meaningful role to play in this
though Aramco will of investors. transition.”
retain full ownership and
operational control. Deal detail Financing
In a statement to press on December 7, Aramco While details about the financing of the deal are
WHAT NEXT: announced that it had signed a 20-year agree- yet to be announced, Aramco is believed to have
Work is ongoing to ment with a consortium jointly led by Black- submitted a request for proposals (RfP) to a pool
expand the Master Rock Real Assets and Hassana, the investment of banks.
Gas System and the management arm of the kingdom’s General Citigroup, HSBC Holdings and Mizuho
Kingdom recently said it Organisation of Social Insurance (GOSI), worth Financial Group were all reported to have
will further increase its $15.5bn, which the Saudi firm will receive up been involved in providing around $10.5bn of
capacity. front, “further strengthening its balance sheet”. financing for the transaction, with equity said to
The investors will hold a 49% stake in the new comprise around $3.5bn of the investment in a
Aramco Gas Pipeline Co. (AGPC), with the par- structure that largely mirrors that of the oil pipe-
ent firm holding the majority share. lines deal.
By leasing the rights to the gas network then In September, EIG and its AOPC partners
leasing these rights back to Aramco, the inves- were reported to be preparing to issue $4-4.5bn
tors will be entitled to receive a pipeline utilisa- of bonds to refinance the loan that paid for pipe-
tion tariff from Aramco, which will retain full line lease. Sources said that the bonds would be
ownership and operational control of the pipe- issued in two or three tranches, echoing com-
line network. ments reported at the time of the deal, though
The deal follows the closure in June of a sim- expediting the 2022-2024 timeline.
ilarly structured deal for a 49% stake in Aramco The first of these was expected to be issued
Oil Pipelines Co. (AOPC) that brought the in October, with the consortium targeting at
company an upfront payment of $12.4bn for a least $4bn. A second tranche is planned to cover
25-year lease. The stake in the oil pipeline busi- around $5-5.5bn, though no date for this has yet
ness was leased to a consortium led by US-based been indicated.
EIG Global Energy Partners and including Abu
Dhabi sovereign fund Mubadala, China’s Silk Gas network
Road Fund and Hassana. Aramco’s gas network includes the Master Gas
The Saudi investment firm had been widely System which transports gas from the reserve-
tipped to be involved in the bidding process, rich Eastern Province to population hubs in
with BlackRock also reported last month as a Central and Western areas.
likely bidder. It is understood that other inves- The Master Gas System network has a total
tors may join the consortium at a later date, as current capacity of 9.6bn cubic feet (272mn
Mubadala, Silk Road Fund and Hassana did fol- cubic metres) per day following expansion in
lowing the oil transaction. 2017 and 2018.

P4 www. NEWSBASE .com Week 49 08•December•2021