Aramco has approached banks to help finance the sale of a significant portion of its gas pipelines.
This is Saudi Aramco’s second major deal, the first being a $12.4 billion deal for oil pipelines.
Aramco draws inspiration from its pipeline sales contracts
The sale of shares in the gas pipelines is expected to draw heavily on the first oil pipeline agreement.
Aramco sold 49% of Aramco Oil Pipelines under a lease and sale and leaseback agreement.
In addition, rights to 25 years of tariff payments for oil transported on the pipelines accompany the sale.
A project already underway and some advisors in the pipeline
Eight banks have already underwritten nearly $11 billion in debt to support the pipeline deal.
In addition, Aramco has already hired Morgan Stanley as M&A advisor, as well as the Japanese banking group MUFG.
The latter had already advised on the financing of the pipeline, and is now being approached to assist with this new sale.
The sale of the pipeline shares to a consortium was Aramco’s biggest deal for several years.
Indeed, the public offering at the end of 2019 was a record for the company, raising around $29.4 billion.
The energy giant is now calling on several banks to support the financing of this major new sale.
Replicating ADNOC’s success
In concrete terms, this agreement is to be financed by bond subscriptions over two or three transactions.
The first of these transactions is scheduled for the first quarter of 2022.
Aramco chose this system following the success of ADNOC’s sale and leaseback agreements.
Saudi Arabia is said to be the world’s sixth-largest gas market, and agreements of this kind demonstrate the importance of oil and gas pipeline assets.
It is from this overwhelming market that the Master Gas System derives value from its gas deposits.
For the moment, Aramco has not chosen the banks that will accompany it, and Morgan Stanley and MUFG have declined to comment.
