Aramco and EIG PArtners have just completed one of the world’s largest energy infrastructure transactions.
EIG has acquired 49% of Aramco Oil Pipelines, the newly created entity managing Aramco’s oil pipelines.
The transaction is worth over $12.4 billion.
Aramco signs a financial agreement
The agreement signed between the Saudi national oil company and EIG is a leasing agreement.
It gives EIG a 49% stake in the newly-formed Aramco Oil Pipelines Co.
to EIG.
In addition, EIG is guaranteed tariff payments on Aramco’s pipeline network for 25 years.
EIG very active in energy investments
EIG Global Energy is an investment company based in Washington DC.
In total, it has invested over $34 billion in energy and energy infrastructure.
With this agreement, EIG has overtaken other major investors who have pulled out, such as the American BlackRock, which has just announced its commitment to achieving carbon neutrality by 2050.
An agreement in line with Saudi strategy
According to Aramco, the transaction is part of the company’s strategic continuity to maximize the value of its shares.
Going public in 2019, the company is said to be preparing a basic financing package for its bidders.
This would be a seller-provided financing package that buyers can use to support their purchase.
An agreement with little impact on production
Under the agreement, Aramco retains operational control of its pipeline network, including risks and capital expenditure.
Similarly, the company, majority-owned by the Saudi government, remains subject to the Kingdom’s gross oil production decisions.
Aramco’s aim is to focus on Asia by cutting spending, following a fall in net profit in 2020.
