Page 8 - MEOG Week 17 2021

MEOG FINANCE & INVESTMENT MEOG

Aramco’s asset strategy

plots a complex path

SAUDI ARABIA NOW that Saudi Aramco has completed the rate payments for crude transferred through the
lease-out and lease-back of a stake in its newly extensive pipeline network.
formed oil pipelines subsidiary, attention has However, while the UAE’s Mubadala Invest-
begun to turn to other options the state oil giant ment Co. is believed to be joining the consor-
may have for raising cash to cover its dividend tium, MEOG understands from sources close
obligations. to proceedings that prospective bidders Apollo
While Bloomberg last week quoted anony- Global Management, BlackRock, Brookfield
mous sources as saying that Aramco could look Asset Management and Global Infrastructure
to continue its asset monetisation strategy by Partners (GIP) all declined to make final offers
bringing partners in for the development of oil because of Aramco’s asking price.
and gas fields, such a move would be far more Meanwhile, as MEOG recently reported, Ara-
complex and sensitive than the midstream one mco could consider selling minority shares in
completed a week earlier. mid- and downstream infrastructure including
The sources told Bloomberg that the com- its terminals and refineries, with the company
pany was now carrying out a strategic review of having already invested in four domestic refin-
its upstream business that could see it bring in ing joint ventures (JVs) with foreign companies
outsiders to finance or develop less sensitive oil as well as a handful of overseas facilities.
and gas fields. A subsequent Bloomberg report cited sources
Middle East Oil & Gas (MEOG) understands, as saying that Aramco would continue to follow
however, that this is likely to be far more com- in regional rival Abu Dhabi National Oil Co.
plicated than just Aramco choosing to bring (ADNOC’s) footsteps by repeating the AOPC
in foreign help. Any such move would need deal with a gas-focused version.
the express approval of the Ministry of Energy Aramco’s Master Gas System network has a
(MoE), through which Aramco received its total current capacity of 9.6bn cubic feet (272mn
concession to develop the Kingdom’s oil and gas cubic metres) per day following an expansion in
reserves for an initial 40-year period (extendable 2017 and 2018.
by a further 80 years). An additional expansion phase was due to be
As should be expect from the world’s largest completed in 2019 taking total capacity to 12.5
oil exporter, control over production and even bcf (354 mcm) per day through an additional
the related data is incredibly sensitive, and it is 1,600 km of pipelines to increase gas supplies to
a stretch to assume that any of the company’s the Red Sea coast. However, articles on the Ara-
existing oilfields may be considered for external mco website in October 2020 said that the “next
participation. phase” remained under construction, noting the
With that in mind and Aramco’s unconven- addition of 821 km of new pipelines, just over
tionals division already operating as a separate half the amount anticipated when it released its
sub-division of the upstream business, enlisting 2017 annual report. According to Aramco, “the
shale specialists from the US, for example, could total length [of] pipeline in service, ready for Pipelines of the Master
present an interesting prospect that ring-fences commissioning, or decommissioned, is 3,850 Gas System.
the most valuable conventional assets. Mean- km, and pipelines under construction total an
while, a gas-focused venture may hold appeal, additional 1,075 km”.™ Source: Aramco
particularly with the Kingdom home to 9.4 tril-
lion cubic metres of gas reserves, the eighth-larg-
est in the world. Oil and condensate reserves
covered by Aramco’s concession are estimated
by the company at 198.8bn barrels.
Given this scale, there are unlikely to be many
E&P firms not interested in taking part, but even
with assets like Ghawar, Khurais, Safaniyah,
etc. strictly off-limits, Aramco’s insistence on
“pre-eminence” throughout its operations, the
price of participation in any such offering may
be prohibitive.
Earlier this month, the company successfully
closed a $12.4bn deal for a ‘consortium’ led by
EIG Global Partners to acquire a 49% stake in
Aramco Oil Pipelines Co. (AOPC) for a dura-
tion of 25 years. Under the deal, the Saudi firm
will be liable for all maintenance and for making

P8 www. NEWSBASE .com Week 17 28•April•2021