Aramco selling $12.4bn stake in pipeline rights unit

Investors led by EIG Global Energy Partners agreed to acquire a roughly $12.4bn stake in a Saudi Aramco oil-pipeline rights company.

The group will acquire a 49 per cent equity stake in Aramco Oil Pipelines Co., a newly formed entity with rights to 25 years of rate payments for oil shipped through the Saudi oil giant’s network of conduits, EIG said in a statement. The deal implies a total equity value of about $25bn for Aramco Oil Pipelines.

The deal is part of Saudi Arabia’s drive to open up to foreign investment and use the money to diversify its economy. Asset disposals also go some way to helping the energy giant maintain payouts to shareholders, as well as investments in oil fields and refinery projects. The company paid a $75bn dividend last year, the highest of any listed company, almost all of which went to the state.

Aramco has become the world’s third-largest company by market value, trailing only Apple and Microsoft Corp., after an initial public offering in 2019 in which the oil giant raised $25.6bn for less than 2 per cent of its shares.

“This landmark transaction defines the way forward for our portfolio optimisation programme,” Aramco chief executive officer Amin Nasser said in the statement. “Aramco’s strong capital structure will be further enhanced with this deal, which in turn will help maximise returns for our shareholders.”

The deal was described as a lease-and-lease-back agreement. The state-controlled company will lease the usage rights in its pipelines to Aramco Oil Pipelines. The new entity will grant back to Aramco the exclusive right to operate and maintain the network for 25 years and collect rates from the parent company in return. Aramco will continue to retain ownership of the pipelines.

“This transaction aligns perfectly with EIG’s philosophy of investing in high-quality assets with contracted cash flows in critical infrastructure,” Robert Blair Thomas, chief executive officer of EIG, said in the statement.

The Washington-based firm owns about $22bn in energy-related assets globally.