EIG, Aramco ink US$12.4 billion infrastructure deal

KUALA LUMPUR: EIG, a leading institutional investor to the global energy sector and one of the world’s leading infrastructure investors, has announced entering into a lease and lease-back agreement with Saudi Arabian Oil Co (Aramco).

Under this agreement, a consortium of investors led by EIG will acquire a 49 per cent equity stake in Aramco Oil Pipelines Company (Aramco Oil Pipelines), a newly-formed entity with rights to a 25-year tariff payments for oil transported through Aramco’s stabilised crude oil pipeline network.

The transaction is valued at approximately US$12.4 billion with Aramco holding the remaining 51 per cent stake in the new entity, indicating a total equity value of Aramco Oil Pipelines of approximately US$25.3 billion. (US$1 = RM4.133)

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.

According to a statement, 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.

The tariff will be backed by minimum volume commitments. Aramco will at all times retain title to, and operational control of, the pipeline network and will assume all operating and capital expense risk.

“This is an extraordinary opportunity for EIG’s investors, and we are proud to partner with Aramco in this marquee global infrastructure asset,” said EIG chairman and chief executive officer, R. Blair Thomas, adding the transaction aligned perfectly with EIG’s philosophy of investing in high-quality assets with contracted cash flows in critical infrastructure.