US-based EIG takes a minority stake in Aramco pipelines
US-based investment group EIG said April 9 it secured a deal valued at $12.4bn to take a minority stake in crude oil pipeline networks from Saudi Aramco.
EIG under the terms of the agreement takes a 49% stake in Aramco’s pipeline company, a newly-formed entity with rights to a quarter century’s worth of tariff payments for oil sent through Aramco’s crude oil pipeline network.
This is the first deal of its kind since Saudi Aramco went public in 2019.
“This landmark transaction defines the way forward for our portfolio optimisation program,” Aramco president Amin H. Nasser said.
Aramco will lease usage rights to its crude oil pipeline network as part of the transaction, giving it a way to raise capital without ceding control over the assets in question. As such, it will not influence crude oil production volumes from Aramco or production decisions made by the Saudi government.
Saudi Arabia is committed to the bulk of the voluntary production restraints imposed by OPEC and its allies.
Net income for Aramco, the world’s largest oil company, came to $49bn last year, marking a 44% decline from $88.2bn in 2019. Revenues tumbled to $229.9bn from $329.8bn, owing to weaker oil prices and production decline, while operating costs came to $127.7bn, versus $149.8bn a year before.
EIG said the pipeline transaction is expected to close as soon as feasibly possible.