(Bloomberg) – Aramco is considering selling a stake in its vast pipeline network to help free up liquidity and attract more international investors to Saudi Arabia, people familiar with the matter said.
The state-owned power producer is holding preliminary discussions on the potential move, people said, asking not to be identified because the information is private. Any deal could earn Dhahran-based Aramco billions of dollars depending on the structure of a deal, they said.
The talks come just two weeks after the company announced that a consortium led by Washington-based EIG Global Energy Partners LLC would invest $ 12.4 billion in its pipelines.
It is not known if the gas agreement would be structured in the same way. For pipelines, investors will hold a 49% stake in a new subsidiary that holds lease rights to the network. Aramco will retain ownership of the pipelines themselves and will likely continue to hold a controlling stake in the subsidiary.
Governments in the Persian Gulf are increasingly using their energy companies to raise funds and strengthen their finances in the wake of the oil price collapse triggered by the coronavirus last year. Abu Dhabi National Oil Co. raised more than $ 10 billion last June by selling lease rights on its gas pipelines to investors such as Global Infrastructure Partners and Brookfield Asset Management Inc. Qatar Petroleum plans to sell up to $ 10 billion dollars of what would be his first dollar bonds.
Aramco is also conducting a strategic review of its upstream business in a move that could allow it to introduce outside investors in some of its oil and gas assets, Bloomberg News reported last week. Aramco chairman Yasir Al-Rumayyan has started selling stakes in non-core assets to help maintain the company’s $ 75 billion dividend, almost all of which goes to the Saudi government.
Aramco’s Master Gas System is a network of pipelines connecting its production to processing sites throughout the kingdom. The infrastructure has a capacity of about 9.6 billion cubic feet per day, according to Aramco’s annual report.
Deliberations are at an early stage and there is no certainty that Aramco will proceed with a transaction, the people said. Aramco, officially known as Saudi Arabian Oil Co., declined to comment.
The company reshuffled its leadership last year and created a division focused on âportfolio optimization,â which âwill assess existing assetsâ and improve access to growing markets. It is headed by Abdulaziz Al Gudaimi, who reports to Managing Director Amin Nasser.
Saudi Arabia has the eighth largest gas reserves in the world and the largest in the Arab world after Qatar, according to BP Plc. They had mostly been overlooked by the kingdom as it focused instead on its huge oil fields. In recent years, the government has sought to increase gas production – which reached an all-time high in 2020 – to diversify the economy and transition to cleaner fuels for local power plants.
– With the help of Salma El Wardany and Lars Paulsson.
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