Saudi Aramco has signed a deal with a consortium led by EIG Global Energy Partners (EIG), one of the world’s leading energy infrastructure investors, to form subsidiary Aramco Oil Pipelines Company. Aramco will receive upfront proceeds upon closing of approximately $12.4 billion.
The company will lease usage rights for Aramco’s stabilized crude oil pipeline network for a 25-year period. Aramco Oil Pipelines Company 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% majority stake in the new company and the EIG-led consortium will hold a 49% stake.
“This landmark transaction defines the way forward for our portfolio optimization program,” said Aramco president and CEO 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.
“Additionally, our long-term partners in this venture will benefit from investment in one of the world’s most robust energy infrastructures. Moving forward, we will continue to explore opportunities that underpin our strategy of long-term value creation,” he added.
“Aramco’s oil pipeline network is a marquee global infrastructure asset,” R. Blair Thomas, EIG’s chairman & CEO said. “We look forward to investing in this infrastructure which is critical to the global economy, and to driving value for our institutional investors worldwide.”
Aramco will continue to retain full ownership and operational control of its stabilized crude oil pipeline network. The transaction will not impose any restrictions on Aramco’s actual crude oil production volumes that are subject to production decisions issued by the Kingdom.
