Aramco, BlackRock Co-sign $15.5 bln worth Lease-back Deal

Aramco and BlackRock co-signed $15.5 bln worth lease-back deal.

It includes Aramco gas pipeline network, with a consortium led by BlackRock Fixed Assets company and Hassana Investment company, the investment management arm of the General Organization for Social Insurance of Saudi Arabia.

Making it one of the world’s largest energy infrastructure deals.

The deal represents a significant progress, for Saudi Aramco’s assets improvement program, as it is the company’s second deal of its kind this year, after the completion of the infrastructure deal on Aramco’s crude oil pipeline network, last June.

Upon completion of the gas pipeline deal, Aramco will receive revenues of about $15.5 billion, which will enhance its financial position.

The transaction will generate additional value from the company’s diversified asset base, attract the interest of a wide range of investors, from around the world, and highlight attractive investment opportunities.

As part of the deal, the newly created Aramco Gas Supply company will lease and lease back usage rights, in Saudi Aramco’s gas pipeline network, for a period of 20 years.

In return, Aramco Gas Supply company will receive a tariff paid by Saudi Aramco for gas products, that flow through the network, and this tariff is linked to a minimum gas flow.

Aramco will retain a majority stake of 51% in Aramco Gas Supply company, and sell 49% of the stake to investors, led by BlackRock and Hasana Investment company.

Aramco will retain full ownership of the pipeline network, with full operational control over it, and this transaction will not impose any restrictions on the company, in terms of production quantities.

Known for its commitment to sustainable practices, Aramco is a pioneer, in reducing greenhouse gas emissions, which are currently among the lowest, in the energy sector, all over the world.

Commenting on the signing of this deal, Saudi Aramco President and CEO, Amin Al-Nasser said: “We are very pleased to sign this giant investment deal in the gas pipeline network, as this deal is one of the key elements, in Saudi Aramco’s strategy to develop a larger and stronger business ecosystem.

Especially, in the field of gas, which is one of the major growth drives in the company’s business, he added.

We witnessed the signing of agreements a few days ago to develop  Al-Jafoura field, which will constitute a major tributary to Saudi Aramco’s business, he explained.

Today, this historic deal of investment in the pipeline network, comes as a milestone that supports the successful program, started by Saudi Aramco, since a year ago, to improve its business portfolio, in this respect, he elaborated.

This transaction contributes to strengthening our financial position with a positive impact on Saudi Aramco’s ability to create long-term value for its shareholders, he stated.

It is very important to emphasize that this transaction supports our track record of attracting major international investors to the Kingdom, which is witnessing major transformations, in various fields, he drew attention.

Such sectors as well as Saudi Aramco are essential part of enabling these transformations, he underscored.

If we look to the future in the next 20-30 years, and move towards, we expect gas to play a key role in the global transition, to a more sustainable energy future, and our partners will benefit from a deal tied to world-class gas infrastructure assets, he concluded.”

 In turn, BlackRock Chairman and CEO, Larry Fink, said: “BlackRock is pleased to work with Saudi Aramco and Hasana Investments, on this historic infrastructure deal, in the Kingdom of Saudi Arabia.

Saudi Aramco and the Kingdom are making meaningful and ambitious strides, he added.

 “The Saudi economy will shift towards renewable energy sources, clean hydrogen and zero carbon neutrality, in the future, he indicated, pointing that there is no doubt that the responsibly managed natural gas infrastructure plays an important role in this transformation,” he concluded.

For his part, Hasana Investment company CEO, Saad Al-Fadhli said: “Hasana is pleased to be a part of this historic deal, and the world-class assets associated with it.

Without a doubt, we are particularly excited about this deal, as it is falling in line with our strategy to create lasting value for the General Organization for Social Insurance, as well as strengthening our long-term partnerships, with leading and reputable entities such as Saudi Aramco and BlackRock,” he concluded.