RIYADH: Saudi Aramco signed a $15.5 billion lease and leaseback deal involving its gas pipeline network with a consortium led by BlackRock Real Assets and Hassana Investment Co., said a statement.
Considered to be one of the largest energy infrastructure deals, it represents Aramco’s asset optimization program and is the second such infrastructure transaction by Aramco this year after the closing of the oil pipeline infrastructure deal earlier in June 2021.
Upon completion of the gas pipeline transaction, Aramco will receive upfront proceeds of $15.5 billion, further strengthening its balance sheet, the statement added.
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.”
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 Aramco for a 20-year period. 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. Aramco 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, which is the investment management arm of the General Organization for Social Insurance.
Saad Al-Fadly, CEO of Hassana Investment Company, added: “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.”
According to the statement, Aramco will continue to retain full ownership and operational control of its gas pipeline network and the transaction will not impose any restrictions on Aramco’s production volumes.
Aramco CEO said: “With gas expected to play a key role in the global transition to a more sustainable energy future, our partners will benefit from a deal tied to a world-class gas infrastructure asset.”
The announcement 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.
Abdulaziz M. Al Gudaimi, Aramco Senior Vice President of Corporate Development, said: “We are pleased that we are concluding the second transaction, seeking long-term partners who understand and appreciate the industry.”
The gas pipeline transaction is expected to close as soon as practicable, subject to customary closing conditions, including any required merger control and related approvals.