Saudi Aramco seeks $ 7.5 billion loan for oil pipeline investors
Pipeline deal marks effort to raise money from leasing rights
Saudi Aramco is lining up a loan of about $ 7.5 billion for potential investors in its oil pipelines, according to people familiar with the matter.
The world’s biggest oil producer has begun talks with lenders to secure favourable terms for the funding package that would then be offered to investors, the people said.
The discussions are occurring in parallel with the sale of a stake in a pipeline unit, which could raise about $ 10 billion for Aramco, the people said.
A pipeline deal would be the first phase of Aramco’s effort to raise money from leasing rights or stakes in non- core assets, mirroring what Abu Dhabi National Oil Co ( Adnoc) has done in the past few years. The Saudi company is working with advisers including JP Morgan Chase & Co. and Moelis & Co., the Wall Street investment bank that’s also involved in the Adnoc deals. Aramco didn’t immediately respond to requests to comment.
Selling leasing rights
Adnoc, which pumps most of the oil and gas in the UAE, has generated more than $ 15 billion from the likes of Apollo Global Management Inc., Brookfield Asset Management Inc. and Singapore’s sovereign wealth fund. The company sold shares in its fuel- retail arm and leasing rights for properties and natural- gas pipelines.
Aramco, which for years maintained only minimal corporate debt, is increasingly tapping new sources of funding as it looks tomaintain annual dividend payments of $ 75 billion at a time of lower oil prices. Most of those payouts go to the Saudi government.
The firm’s gearing, a measure of debt to equity, has risen to 21.8 per cent, above its target range of 5 per cent to 15 per cent. Debt also rose because the company took on loans to pay for a $ 69 billion acquisition of Saudi Basic Industries Corp last year.
Saudi Arabia has cut supplies of February- loading crude for some Asian buyer by up to a quarter while meeting requirements of at least four others, several refinery and trade sources with knowledge of the matter said yesterday.