Aramco to raise $12.4 billion with a 25-year lease deal EIG-led consortium
Aramco to raise $12.4 billion with a 25-year lease deal EIG-led consortium

Institutional and infrastructure investor EIG to acquire 49 per cent equity stake in the new entity, Aramco Oil Pipelines. EIG will have rights to 25-years of tariff payments for oil transported through Aramco’s stabilised crude oil pipeline network. As per the lease and lease-back agreement with Saudi Arabian Oil Co. (Aramco) and EIG, the transaction is valued at approximately $12.4 billion.

The remaining 51 per cent stake in the new entity will be with Aramco. The total equity value of Aramco Oil Pipelines is approximately $25.3 billion.

The pipeline network, which includes all of Aramco’s existing and future stabilised crude pipelines in the Kingdom of Saudi Arabia, connects oilfields to downstream networks. The pipeline network transports 100 per cent of Aramco’s crude oil produced in the Kingdom under its concession agreement.

As part of the transaction, Aramco will lease the usage rights in its stabilised crude oil pipelines network to Aramco Oil Pipelines, and Aramco Oil Pipelines will grant back to Aramco the exclusive right to use, transport through, operate and maintain the pipeline network during the 25-year period in exchange for a quarterly, volume-based tariff, payable by Aramco.

Meanwhile, with the controlling stake with Aramco, it will have operational control of, the pipeline network and will assume all operating and capital expense risk. Aramco stated that this will not impose any restrictions on Aramco’s actual crude oil production volumes.

“This is an extraordinary opportunity for EIG’s investors, and we are proud to partner with Aramco in this marquee global infrastructure asset,” said R. Blair Thomas, EIG’s Chairman and CEO.

Aramco President and CEO, Amin H. Nasser, said, “This landmark transaction defines the way forward for our portfolio optimisation program. We are capitalising on new opportunities that also align strategically with the Kingdom’s recently launched Shareek program. Aramco’s strong capital structure will be further enhanced with this deal, which in turn will help maximise returns for our shareholders. Additionally, our long-term partners in this venture will benefit from investment in one of the world’s most impressive energy infrastructures.”

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