Page 8 - MEOG Week 37 2021

MEOG FINANCE & INVESTMENT MEOG

Consortium to sell bonds to

refinance Aramco pipe loan

SAUDI ARABIA THE consortium of companies that leased a is targeted in December 2021.
minority stake in Saudi Aramco’s oil pipeline Aramco is seeking to outdo the records it set
business is planning to issue $4bn or more of with the oil pipeline deal as it attempts to move
bonds later this year to refinance the loan that forward with an almost identical deal for its gas
paid for the deal. pipeline business. The company is understood
Led by US-based investor EIG Global Part- to be targeting at least $17bn when it leases out
ners, in April the group acquired a 49% stake in a stake in the anticipated Aramco Gas Pipelines
Aramco Oil Pipelines Co. (AOPC) for a dura- Co. (AGPC).
tion of 25 years under a $12.4bn deal that grants As it did for the AOPC deal, Reuters’ sources
the Saudi firm exclusive rights to use, transport said that Aramco has – through advisors –
through, operate and maintain the extensive approached potential bidders including state-
network. For this, it will pay a “quarterly, vol- backed Chinese and South Korean funds as well
ume-based tariff. as North American private equity and infra-
This will be backed by minimum volume structure funds. The formal sale process is antic-
commitments and Aramco will retain full own- ipated to begin in the next month.
ership of the pipelines. Several of those believed to have been
The agreement was facilitated by $10.5bn approached by Aramco’s advisors were in the
in staple financing arranged by Aramco with running either for the oil pipelines deal or one or
a group of banks including BNP Paribas, Citi- both of similar oil and gas pipeline deals by Abu
group, HSBC Holdings and Mizuho Financial Dhabi National Oil Co. (ADNOC) which served
Group. The sources said that the bonds would as the blueprint for Aramco’s effort.
be issued in two or three tranches, echoing com- One source said that the deal might comprise
ments reported at the time of the deal, though around $3.5bn of equity, with the remainder
expediting the 2022-2024 timeline. made up of bank debt, while another said the
The first of these is expected to be issued deal could surpass $20bn in value.
next month, with the consortium targeting at Aramco’s Master Gas System network has a
least $4bn. A second tranche is planned to cover total current capacity of 9.6bn cubic feet (272mn
around $5-5.5bn, though no date for this has yet cubic metres) per day following expansion in
been indicated. 2017 and 2018.
AOPC’s key asset is the massive East-West An additional expansion phase was due to be
Pipeline (EWP), which is currently undergoing completed in 2019, taking total capacity to 12.5
a $250mn project to raise capacity from 5mn bcf (354 mcm) per day through an additional
barrels per day to 7mn bpd. 1,600 km of pipelines to increase gas supplies to
At various points over the past two years the the Red Sea coast. However, articles on the Ara-
use of drag-reducing agents and “interim con- mco website in October 2020 said that the “next
version of NGL pipelines” allowed for a “tempo- phase” remained under construction, noting the
rary mechanical capacity increase” to reach the addition of 821 km of new pipelines, just over
upper limit for short periods; however, during half the amount predicted when it released its
2018 and 2019 flows averaged 2.1mn bpd. 2017 annual report.
The conduit is vital for Aramco as it trans- According to Aramco, “the total length [of]
ports crude from the Abqaiq processing hub pipeline in service, ready for commissioning,
in the oil-rich Eastern Province to refineries or decommissioned, is 3,850 km, and pipelines
and export terminals at Yanbu’ on the Red Sea under construction total an additional 1,075
Coast, and completion of the expansion project km”.™

P8 www. NEWSBASE .com Week 37 15•September•2021