Page 11 - MEOG Week 23 2021

MEOG FINANCE & INVESTMENT MEOG

Mubadala joins EIG in

Aramco pipeline consortium

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

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