EIG Signs $12.4 Billion Infrastructure Deal with Aramco
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EIG has entered into a lease and lease-back agreement with Saudi Arabian Oil Co. (Aramco), under which a consortium of investors led by EIG will acquire a 49 percent equity stake in Aramco Oil Pipelines Company, a newly formed entity with rights to 25-years of tariff payments for oil transported through Aramco’s stabilized crude oil pipeline network.
The transaction is valued at approximately $12.4 billion with Aramco holding the remaining 51 percent stake in the new entity, indicating a total equity value of Aramco Oil Pipelines of approximately $25.3 billion.
The pipeline network, which includes all of Aramco’s existing and future stabilized crude pipelines in the Kingdom of Saudi Arabia, connects oilfields to downstream networks. The pipeline network transports 100 percent of Aramco’s crude oil produced in the Kingdom under its concession agreement.
As part of the transaction, Aramco will lease the usage rights in its stabilized crude oil pipelines network to Aramco Oil Pipelines, and Aramco Oil Pipelines will grant back to Aramco the exclusive right to use, transport through, operate, and maintain the pipeline network during the 25-year period in exchange for a quarterly, volume-based tariff, payable by Aramco. The tariff will be backed by minimum volume commitments. Aramco will at all times retain title to, and operational control of, the pipeline network and will assume all operating and capital expense risk. The transaction will not impose any restrictions on Aramco’s actual crude oil production volumes that are subject to production decisions issued by the Kingdom.
“This is an extraordinary opportunity for EIG’s investors, and we are proud to partner with Aramco in this marquee global infrastructure asset. This transaction aligns perfectly with EIG’s philosophy of investing in high-quality assets with contracted cash flows in critical infrastructure. We look forward to a long-term partnership with Aramco and to delivering value for our investors through this landmark investment,” said R. Blair Thomas, EIG’s chairman and CEO.
“This landmark transaction defines the way forward for our portfolio optimization program. We are capitalizing on new opportunities that also align strategically with the Kingdom’s recently-launched Shareek program. Aramco’s strong capital structure will be further enhanced with this deal, which in turn will help maximize returns for our shareholders,” said Aramco President and CEO, Amin H. Nasser.
“Additionally, our long-term partners in this venture will benefit from investment in one of the world’s most impressive energy infrastructures. Moving forward, we will continue to explore opportunities that underpin our strategy of long-term value creation,” added Nasser.
About EIG
EIG is a leading institutional investor to the global energy sector with $22.0 billion under management as of December 31, 2020. EIG specializes in private investments in energy and energy-related infrastructure on a global basis. During its 39-year history, EIG has committed over $34.9 billion to the energy sector through more than 365 projects or companies in 36 countries on six continents. EIG’s clients include many of the leading pension plans, insurance companies, endowments, foundations and sovereign wealth funds in the U.S., Asia and Europe. EIG is headquartered in Washington, D.C. with offices in Houston, London, Sydney, Rio de Janeiro, Hong Kong and Seoul.
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