Saudi Aramco to hold 51 percent stake in new oil pipelines company
The $12.4-billion deal aligns with Saudi Arabia’s recently announced ‘Shareek’ program
Saudi Aramco has agreed on a $12.4 billion leaseback deal with a consortium led by EIG Global Energy Partners in one of the biggest energy infrastructure transactions.
It represents a continuation of Aramco’s strategy to unlock the potential of its asset base and maximize value for its shareholders, the company said in a statement.
A newly formed unit called Aramco Oil Pipelines Co. will lease usage rights in Aramco’s stabilized crude oil pipelines network for 25 years.
In return, Aramco Oil Pipelines Co. will receive a tariff payable by Aramco for the stabilized crude oil that flows through the network, backed by minimum volume commitments.
Aramco will hold a 51 percent majority stake in the new company and the EIG-led consortium will hold a 49 percent stake.
The Saudi oil giant said it would retain full ownership and operational control of its stabilized crude oil pipeline network and that the transaction would not impose any restrictions on Aramco’s actual crude oil production volumes. “This landmark transaction defines the way forward for our portfolio optimization program,” said Aramco President Amin Nasser.
“We are capitalizing 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 transaction, which in turn will help maximize returns for our shareholders.”
The Shareek program involves incentives for publicly quoted companies to channel dividend payments into long-term investment in the Saudi economy.
It aims to increase domestic non-central government investments from the SR4 trillion ($1.1trillion) realized over the 2009-2018 period to SR10 trillion over the next decade — an increase
of about 150 percent.
The program is expected to contribute to the continued progress of the Saudi economy’s ranking among the largest global economies, with the goal of rising to 15th from its current position of 18th, alongside enhancing confidence in the Kingdom’s investment ecosystem.
Companies that qualify for participation in Shareek will work closely with the relevant government ministries to create tailored investment plans, which will then be fast-tracked to completion.