Saudi Aramco said on Friday it had raised $12.4bn from the sale of a minority stake in a newly formed oil pipeline venture to a consortium of investors.
Saudi Arabia’s state energy giant said it had sold 49 per cent of Aramco Oil Pipelines to investors led by Washington-based EIG Global Energy Partners.
The move comes as Saudi Aramco, which listed on Riyadh’s Tadawul stock exchange in 2019, seeks to monetise assets to generate cash for the government, its main shareholder.
Saudi Aramco will lease the usage rights of its pipelines to the new venture, which is valued at $25.3bn and has rights to 25 years of tariff payments for oil transported through the kingdom’s crude network.
The state company will hold a 51 per cent stake in the oil pipeline business while retaining full ownership and operational control of the network.
Saudi Aramco did not say which other groups were part of the consortium.
Mubadala, an Abu Dhabi sovereign wealth fund, said it was still in talks with EIG about joining the investor group. EIG beat bids from BlackRock and Brookfield Asset Management, people briefed on the process said. BlackRock and Brookfield declined to comment.
Under Crown Prince Mohammed bin Salman, Saudi Arabia has leaned on its biggest revenue earner to raise funds to plough into non-oil sectors — from technology to tourism — as it seeks to diversify its economy.
Amin Nasser, chief executive of Saudi Aramco, said the transaction “will help maximise returns for our shareholders”.
Saudi Arabia, which is the world’s largest oil exporter, has taken a massive financial hit in the past year as the coronavirus pandemic battered the global economy and drastically cut demand for energy.
Saudi Aramco, which has pledged to pay the bulk of $75bn in annual dividends promised to the state, alongside taxes and royalties, is also expected to lead a new domestic investment plan to modernise Saudi Arabia.
The latest move is similar to infrastructure deals undertaken by the Abu Dhabi National Oil Company, which has raised billions of dollars through selling and leasing back oil and gas pipeline assets.
Yasir al-Rumayyan, chair of Saudi Aramco and head of the kingdom’s Public Investment Fund, which is Prince Mohammed’s chosen vehicle for his reforms, said the kingdom would try to monetise additional assets.
“Historically speaking, [Saudi Aramco] used to do everything themselves . . . they had their own airports, their own fleets, their own pipelines,” he told the Financial Times earlier this year. “Now, if it makes sense for us to divest some of these assets, we’re definitely going to do it. It could include anything except the main operations.”