Saudi Aramco has signed a $15.5 billion gas pipeline deal with a consortium led by BlackRock Real Assets and local player Hassana Investment Company, which is set to acquire a 49% stake in a new gas pipeline subsidiary.
The new business, Aramco Gas Pipelines Company, will lease the rights of Aramco’s giant network for 20 years.
In return, the subsidiary “will receive a tariff payable by Aramco for the gas products that will flow through the network, backed by minimum commitments on throughput”, the Saudi Arabian oil and gas giant said.
Aramco will hold a 51% stake in Aramco Gas Pipeline Company, selling a 49% stake to the investor group led by BlackRock and Hassana.
BlackRock is a leading international institutional investor. Hassana is the investment management arm of the General Organization for Social Insurance (GOSI) in Saudi Arabia.
This deal represents significant progress in “Aramco’s asset optimisation programme”, Aramco said.
The mega-deal is the second such infrastructure transaction agreed by Aramco this year after the closing of an oil pipeline deal in June, when a consortium led by EIG, a leading institutional global energy investor, acquired a 49% stake in a new Aramco subsidiary in a deal valued at $12.4 billion.
“Upon completion of the gas pipeline transaction, Aramco will receive upfront proceeds of $15.5 billion, further strengthening its balance sheet,” the company said.
The deal unlocks additional value from its “diverse asset base and has attracted interest from a wide range of worldwide investors”.
Aramco will continue to retain full ownership and operational control of its gas pipeline network, and the transaction is unlikely to impose any restrictions on its production volumes.
Amin Nasser, chief executive of Aramco, said that with gas expected to play a key role in the global energy transition, the new partners “will benefit from a deal tied to a world-class gas infrastructure asset”.
Abdulaziz Al Gudaimi, Aramco’s head of corporate development, added: “Our gas pipeline assets are critical and growing, and highly integrated with the rest of Aramco’s oil and gas facilities. We are pleased that we are concluding the second transaction, seeking long-term partners who understand and appreciate the industry.”
He described the transaction as the largest energy infrastructure deal in the region to date.
BlackRock chief executive Larry Fink said: “Aramco and Saudi Arabia are taking meaningful, forward-looking steps to transition the Saudi economy toward renewables, clean hydrogen and a net zero future. Responsibly managed natural gas infrastructure has a meaningful role to play in this transition.”
According to Saad Al-Fadly, chief executive of Hassana Investment Company, the agreement is “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”.
Mark Florian, managing director of BlackRock Real Assets, said: “The strongly contracted nature of this investment is a core part of our investment philosophy and represents an attractive opportunity for our clients who are seeking portfolio diversification through infrastructure.”
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”, Aramco said.