Saudi Aramco has agreed to sell a 49% stake in its newly formed crude oil pipeline entity to EIG Global Energy Partners-led consortium of investors for approximately $12.4bn.
In this regard, the two firms have signed a lease and lease-back agreement.
Under the agreement, EIG-led group will acquire Aramco’s stake in Aramco Oil Pipelines Co.
Aramco Oil Pipelines includes all the existing and future stabilised crude pipelines of Saudi Aramco in Saudi Arabia. These pipelines connect oilfields to downstream networks.
EIG chairman and CEO Blair Thomas said: “This is an extraordinary opportunity for EIG’s investors, and we are proud to partner with Aramco in this marquee global infrastructure asset.
“This transaction aligns perfectly with EIG’s philosophy of investing in high-quality assets with contracted cash flows in critical infrastructure.”
The deal allows the new entity to provide exclusive right to use, transport through, operations, and maintenance of the pipeline network to Saudi Aramco during a 25-year period.
In exchange, Aramco Oil Pipelines will receive payment from Saudi Aramco based on a quarterly, volume-based tariff.
EIG said that the tariff will be underpinned by minimum volume commitments.
Aramco will own the remaining 51% stake in the new company, which is valued at around $25.3bn with the latest deal.
Saudi Aramco expects the agreement to strengthen its balance sheet. It forms part of its strategy to unlock the potential of its asset base and maximise value for shareholders.
Saudi Aramco president and CEO Amin Nasser said: “This landmark transaction defines the way forward for our portfolio optimisation program. We are capitalising on new opportunities that also align strategically with the Kingdom’s recently launched Shareek programme.
“Aramco’s strong capital structure will be further enhanced with this deal, which in turn will help maximise returns for our shareholders.”
The transaction is subject to customary closing conditions and related regulatory approvals.