Saudi Aramco said on Friday it had raised $ 12.4 billion from the sale of a minority stake in a new pipeline company to a consortium of investors.
The Saudi Arabian energy giant said it had sold 49% of Aramco’s pipelines to investors led by Washington-based EIG Global Energy Partners.
The movement comes as Saudi Aramco, which was listed on the Riyadh Tadawul Stock Exchange in 2019, seeks to monetize assets to generate cash for the government, its largest shareholder.
Saudi Aramco will lease the rights to use its pipelines to the new company, which is valued at $ 25.3 billion and is entitled to 25 years of tariff payments for oil transported through the kingdom’s crude network.
The Crown corporation will hold a 51% stake in the pipeline business while retaining full ownership and operational control of the system.
Saudi Aramco did not specify which other groups were part of the consortium. Investors including BlackRock and Brookfield Asset Management, both of whom declined to comment, withdrew after initial talks.
Under Crown Prince Mohammed bin Salman, Saudi Arabia has relied on its largest source of income for to collect funds to enter non-oil sectors – from technology to tourism – as it seeks to diversify its economy.
Amin Nasser, Managing Director of Saudi Aramco, said the transaction “will help maximize returns for our shareholders.”
Saudi Arabia, which is the world’s largest oil exporter, has suffered a huge financial blow over the past year as the Coronavirus pandemic hit the global economy and drastically reduced energy demand.
Saudi Aramco, which has pledged to pay the wholesale $ 75 billion in annual dividends pledged to the state, alongside taxes and royalties, is also expected to drive a new domestic investment plan to modernize Saudi Arabia.
The latest move is similar to infrastructure deals made by Abu Dhabi’s national oil company, which has raised billions of dollars by selling and leasing pipeline and oil assets.
Yasir al-Rumayyan, chairman of Saudi Aramco and head of the kingdom’s public investment fund, which is the vehicle chosen by Prince Mohammed for his reforms, said the kingdom will try to monetize additional assets.
“Historically speaking, [Saudi Aramco] used to do everything themselves. . . they had their own airports, their own fleets, their own pipelines, ”he told the Financial Times earlier this year. “Now, if it makes sense for us to divest some of these assets, we will certainly do so. This can include everything except the main operations. “
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