Saudi Aramco Has Managed To Secure A $12.4 Billion Oil Pipeline Deal
Saudi Aramco Has Managed To Secure A $12.4 Billion Oil Pipeline Deal. Energy giant Saudi Aramco said it has struck a 12.4-billion-dollar deal to sell a minority stake in a newly formed oil pipeline business to a consortium led by US-based EIG Global Energy Partners.
The deal underscores how Aramco, the kingdom’s cash cow, seeks to monetise its once-untouchable assets to generate revenue for the Saudi government as it accelerates efforts to diversify the oil-reliant economy. “Upon closing, Aramco will receive upfront proceeds of around $12.4 billion, further strengthening its balance sheet through one of the largest energy infrastructure deals globally,” the company said in a statement late Friday.
“As part of the transaction, a newly-formed Aramco subsidiary, Aramco Oil Pipelines Company, will lease usage rights in Aramco’s stabilised crude oil pipelines network for a 25-year period.” The EIG-led consortium will hold a 49 percent stake in the subsidiary, Aramco said, adding that it will retain “full ownership and operational control”. “We are proud to partner with Aramco in this marquee global infrastructure asset,” EIG chairman R. Blair Thomas told Yahoo News.
According to Yahoo News, the announcement comes as Aramco faces pressure to maintain hefty dividend payments to the Saudi government, its biggest shareholder, despite posting consecutive falls in profits since it began disclosing earnings in 2019. Last month, Aramco posted a 44.4 percent slump in 2020 net profit due to lower crude prices, piling pressure on government finances as Riyadh pursues multi-billion dollar projects to diversify the economy.
“The (EIG) deal marks an innovative step for Aramco as it seeks to monetise assets to pay down debt, maintain its dividend payments and fund planned investments,” the Energy Intelligence group told Yahoo News.
According to Yahoo News, in a major new diversification push late last month, Saudi Arabia announced plans to pump investments worth $3.2 trillion into the national economy by 2030, roping in the kingdom’s biggest companies including Aramco. Under a programme named “Shareek”, or partner, Aramco and other top Saudi companies will lead the investment drive by contributing five trillion riyals ($1.3 trillion) over the next decade.
In the statement announcing the deal with the EIG-led group, Aramco chief executive Amin Nasser told Yahoo News that the company was “capitalising on new opportunities that also align strategically with the recently-launched Shareek programme.”
