Saudi Aramco considers sale of natural gas pipeline shares

By Amirtha P S, Desk Reporter
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Saudi Arabia’s multinational petroleum and natural gas company, Saudi Aramco, is planning to sell a share in its huge natural gas pipeline network to help free up cash and attract more international investors to the kingdom, according to people familiar with the matter.

Currently, Aramco is holding initial stage discussions on the potential move. According to the sources, a successful deal could raise billions of dollars for the state-owned energy producer depending on how a transaction is structured.

The energy producer is at the forefront of Saudi Arabia’s drive to attract foreign investment and diversify its economy. Earlier this month, Aramco said that it would raise more than $12 billion selling a share in its oil-pipeline unit to a consortium led by EIG Global Energy Partners.

According to media reports, the Saudi Arabia-based company is also conducting a strategic review of its upstream business in a move that could see it introduce external investors to some of its oil and gas assets. 

Meanwhile, Aramco Chairman Yasir Al-Rumayyan has started selling shares in non-core assets to help maintain the company’s $75 billion dividends, most of which goes to the Saudi government.

Aramco’s Master Gas System is a network of pipelines connecting its production with processing sites throughout Saudi Arabia. The infrastructure has a current capacity of about 9.6 billion cubic feet per day, according to the oil giant’s annual report. Discussions are at an early stage and there’s no certainty that Aramco will proceed with a transaction, the people added. 

Last year, the company restructured its senior management and designed a division focused on ‘portfolio optimization,’ which will assess existing assets and enhance access to growth markets. 

According to the British multinational oil and gas company, BP, Saudi Arabia has the eighth largest gas reserves globally and the largest in the Arab world after Qatar. They have mostly been overlooked by the kingdom as it instead focused on its huge oil deposits. In recent years, the government has sought to increase gas production, which reached a record level in 2020, to diversify the economy and transition to cleaner fuels for local power plants.

Related: KPMG to check cybersecurity compliance across Saudi Aramco’s suppliers