Saudi Aramco Signs $15.5-Billion Gas Pipeline Deal With BlackRock

Saudi Aramco is selling 49 percent of its gas pipeline network to a consortium led by BlackRock, for which it will receive $15.5 billion—another step of the Saudi oil giant’s push to monetize oil and gas infrastructure assets in deals with foreign investors.

Aramco has signed the $15.5-billion lease and leaseback deal for its gas pipeline network with a consortium led by BlackRock Real Assets and Hassana Investment Company, the investment management arm of the General Organization for Social Insurance (GOSI) in Saudi Arabia, the world’s largest oil company said in a statement.

Under the deal, Aramco will hold a 51-percent majority stake in its newly formed subsidiary Aramco Gas Pipeline Company, and sell a 49-percent stake to investors led by BlackRock and Hassana. The new company will lease usage rights in Aramco’s gas pipelines network and lease them back to Aramco for a 20-year period. In return, Aramco Gas Pipelines Company will receive a tariff payable by Aramco for the gas products that will flow through the network, backed by minimum commitments on throughput.

“Aramco and Saudi Arabia are taking meaningful, forward-looking steps to transition the Saudi economy toward renewables, clean hydrogen, and a net zero future. Responsibly-managed natural gas infrastructure has a meaningful role to play in this transition,” said Larry Fink, Chairman and CEO of BlackRock.

The deal will help Aramco strengthen its balance sheet, the Saudi giant said.

For BlackRock, the return is also a good investment, Reuters’ George Hay notes.

The gas pipelines deal is the second major infrastructure asset in which Aramco has sold a stake this year.

The Saudi firm has already made one major asset sale deal in 2021—it sold a 49-percent stake in its oil pipeline business to a consortium led by U.S. EIG Global Energy Partners for $12.4 billion.

“We plan to continue to explore opportunities to capitalize on our industry-leading capabilities and attract the right type of investment to Saudi Arabia,” Aramco’s president and CEO Amin Nasser said at the closing of the deal in June.

By Tsvetana Paraskova for Oilprice.com