Investors led by EIG Global Energy Partners have agreed to acquire a $12.4 billion stake in a Saudi Aramco oil-pipeline rights company.
The group will acquire a 49 percent equity stake in Aramco Oil Pipelines Co, a newly formed entity with rights to 25 years of rate payments for oil shipped through the Saudi oil giant’s network of conduits.
In return, Aramco Oil Pipelines Co will receive a tariff payable by Saudi Aramco for the stabilised crude oil that flows through the network, backed by minimum volume commitments.
The deal implies a total equity value of about $25 billion for Aramco Oil Pipelines and is one of the largest energy infrastructure deals globally, Saudi Press Agency reported on Saturday.
The deal is part of Saudi Arabia’s drive to open up to foreign investment and use the money to diversify its economy. The company paid a $75 billion dividend last year, the highest of any listed company, almost all of which went to the state.
Saudi Aramco said it will continue to retain full ownership and operational control of its crude oil pipeline network.
Saudi Aramco president and CEO, Amin H Nasser (pictured below), said: “This landmark transaction defines the way forward for our portfolio optimisation program.
“We are capitalising on new opportunities that also align strategically with the kingdom’s recently-launched Shareek program to promote private sector investments and attract foreign capital. Saudi Aramco’s strong capital structure will be further enhanced with this transaction, which in turn will help maximise returns for our shareholders.
“Additionally, our long-term partners in this venture will benefit from investment in one of the world’s most robust energy infrastructures. Moving forward, we will continue to explore opportunities that underpin our strategy of long-term value creation.”
EIG’s chairman and CEO, R Blair Thomas, added: “We look forward to investing in this infrastructure which is critical to the global economy, and to driving value for our institutional investors worldwide.”
He said that the long-term investment by EIG and other institutional investors underscores the compelling investment opportunity represented by Saudi Aramco’s globally-significant pipeline assets.
The transaction is expected to close as soon as practicable, subject to customary closing conditions, including any required merger control and related approvals and permits, Saudi Press Agency added.
Aramco has become the world’s third-largest company by market value, trailing only Apple and Microsoft, after an initial public offering in 2019 in which the oil giant raised $25.6 billion for less than 2 percent of its shares.
* With Bloomberg
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