Saudi Aramco announced Tuesday that it has 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 Company.
Dubbed by Aramco as “one of the world’s largest energy infrastructure deals”, the company outlined that the transaction represents “significant progress” in its asset optimization program. Upon completion of the deal, Aramco will receive upfront proceeds of $15.5 billion, the company revealed.
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, Aramco noted. 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 highlighted.
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. Aramco said it will continue to retain full ownership and operational control of its gas pipeline network and stated that the transaction will not impose any restrictions on its production volumes. The deal is expected to close as soon as practicable, subject to customary closing conditions, including any required merger control and related approvals.
“Today, we have reached yet another major milestone in our portfolio optimization program as we build towards a bigger and stronger gas business,” Amin H. Nasser, Aramco’s president and chief executive officer, said in a company statement.
“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,” he added.
“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,” Nasser continued.
Larry Fink, the 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. Responsibly managed natural gas infrastructure has a meaningful role to play in this transition,” Fink added.
Saad Al-Fadly, the CEO of Hassana Investment Company, said, “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,” Al-Fadly added.
Back in June, Aramco and an international investor consortium, including EIG and Mubadala, announced the closing of a share sale and purchase agreement in which the consortium acquired a 49 percent stake in Aramco Oil Pipelines Company for $12.4 billion. Described as one of the largest energy infrastructure deals when it was announced by Aramco in April, the deal saw Aramco Oil Pipelines Company and Aramco enter into a 25-year lease and leaseback agreement for Aramco’s stabilized crude oil pipelines network. As part of the transaction, Aramco Oil Pipelines Company will receive a tariff payable by Aramco for stabilized crude oil flows, backed by minimum volume commitments. Aramco continues to hold a 51 percent majority stake in Aramco Oil Pipelines Company.
Aramco describes itself as a leading producer of the energy and chemicals that drive global commerce and enhance the daily lives of people around the globe. The company traces its roots back to 1933 when a Concession Agreement was signed between Saudi Arabia and the Standard Oil Company of California (SOCAL).
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