Saudi Aramco, the world’s largest oil-exporting company, has signed a $15.5 billion lease and leaseback deal involving its gas pipeline network with a consortium led by BlackRock Real Assets and state-backed Hassana Investment Company.
As part of the transaction, a newly-formed subsidiary, Aramco Gas Pipelines Company, will lease usage rights in Aramco’s gas pipelines network and lease them back to the company for 20 years.
In return, Aramco Gas Pipelines Company will receive a tariff payable by Aramco for the gas products that will flow through the network, backed by minimum commitments on throughput. The oil giant will hold a 51 percent majority stake in Aramco Gas Pipeline Company and sell a 49 percent stake to investors led by BlackRock and Hassana, the investment management arm of the General Organization for Social Insurance (GOSI) in the Kingdom.
Aramco will continue to retain full ownership and operational control of its gas pipeline network and the transaction will not impose any restrictions on the oil giant’s production volumes. The company is fully committed to sustainable practices and is an industry leader in reducing greenhouse gas emissions, which are among the lowest in the sector.
Amin Nasser CEO & President Saudi Aramco
“Today, we have reached yet another major milestone in our portfolio optimization program as we build towards a bigger and stronger gas business. It further underscores our commitment to long-term value creation for our shareholders, while bringing in BlackRock and Hassana as partners demonstrates our unique value proposition and ability to attract leading global investors to Saudi Arabia.”
Being one of the world’s largest energy infrastructure deals, it represents significant progress in Aramco’s asset optimization program and is the second such infrastructure transaction made by the company this year.
With the completion of the deal, Aramco will receive upfront proceeds of $15.5 billion. The transaction will also unlock additional value from the oil giant’s diverse asset base and has attracted interest from a wide range of global investors, highlighting the compelling investment opportunity.
Commenting on the deal, Mr. Larry Fink, Chairman and CEO of BlackRock, said, “BlackRock is pleased to work with Saudi Aramco and Hassana on this landmark transaction for Saudi Arabia’s infrastructure. Aramco and Saudi Arabia are taking meaningful, forward-looking steps to transition the Saudi economy toward renewables, clean hydrogen, and a net-zero future.”
Mr. Saad Al-Fadly, CEO of Hassana Investment Company, added, “Hassana is delighted to be part of this landmark transaction and the associated world-class assets. We are particularly excited about this deal as it comes in line with Hassana’s strategy to create enduring value for GOSI and further strengthen our long-lasting partnerships with strong and reputable players such as Aramco and BlackRock.”
The new deal follows a $12.4 billion lease and leaseback transaction concluded in June with a consortium led by EIG Global Energy Partners, which involved Aramco’s stabilized crude oil pipeline network.
The gas pipeline transaction is expected to close soon, subject to customary closing conditions, including any required merger control and related approvals.
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