Saudi oil giant, Aramco announced last Friday it signed a deal with a consortium led by EIG Global Energy Partners to optimize its assets through a lease-and-lease-back agreement; which involves its crude oil pipeline network.
Firstly, the agreement is one of the world’s largest energy infrastructure deals; it will give to the company, upon closing the deal, upfront proceeds of around $12.4 billion which will further strengthen the company’s balance sheets.
Secondly, the transaction represents a continuation of Aramco’s strategy to unlock the potential of its asset base and maximize value for its shareholders. It also reinforces the company’s role as a catalyst for attracting significant foreign investment into the Kingdom.
Thirdly, a new company will be formed, it will be a wholly-owned subsidiary of the Saudi giant: Aramco Oil Pipelines Company; which will lease usage rights in the company’s stabilized crude oil pipelines network for a 25-year period. In return, the new company will receive a tariff payable by Aramco for the stabilized crude oil that flows through the network.
On the other hand, Aramco will hold a 51% majority stake in the new company; and the EIG-led consortium will hold a 49% stake. However, the Saudi giant will continue to retain full ownership and operational control of its stabilized crude oil pipeline network.
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Aramco to expand pipeline assets
Moreover, EIG is a Washington, D.C.-based investment firm that has invested more than $34 billion in energy and energy infrastructure projects around the world.
In addition, Aramco President & CEO, Amin H. Nasser, said. “Aramco’s strong capital structure will be further enhanced with this transaction; which in turn will help maximize returns for our shareholders.”
He also remarked. “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.”
Finally, R. Blair Thomas, EIG’s Chairman & CEO, said. “Aramco’s oil pipeline network is a marquee global infrastructure asset. We also look forward to investing in this infrastructure; it is critical to the global economy, and to driving value for our institutional investors worldwide.”