New York’s BlackRock, Saudi’s Hassana sign 15.5bn deal for Aramco gas pipelines

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New York’s BlackRock, Saudi’s Hassana sign 15.5bn deal for Aramco gas pipelines

On Monday, Aramco, the Saudi Arabia’s state-backed oil giant and the world’s most profitable company on an unaudited basis, said in a statement that the oil industry mogul had cut a $15.5 billion lease-and-leaseback deal for its oil pipelines with a consortium led by BlackRock Real Assets, a subsidiary of BlackRock, alongside Saudi’s state-backed asset manager Hassana Investment Co.

If truth is to be spoken, latest Saudi Aramco move to reach a lease-and-leaseback accord for its oil pipeline networks came forth as more oil producing entities in the Gulf were looking to divest energy asset stakes and raise fresh capitals through long-term leases in a bid to lure in foreign investors in context of a sharp rebound in crude oil futures’ prices.

On top of that, recent Aramco deal to lease its oil pipeline networks for a whopping $15.5 billion followed a similar arrangement, while the Saudi’s state-backed oil giant had leased back a 49 per cent stake at its oil pipelines to a business syndicate led by US-based EIG at a $12.4 billion deal.

Aramco leases oil pipelines to BlackRock, Hassana in $15.5 billion deal

Apart from that, according to the financial terms of the deal, a newly formed Aramco Subsidiary, Aramco Gas Pipelines Co., which holds the lease usage rights in Aramco’s gas pipeline network, would lease the pipelines back to Aramco for a 20-year period.

In exchange, Aramco Gas Pipelines Co would continue to receive a tariff for natgas products that channel through its pipelines, while Aramco would lease back a 49 per cent stake of assets that it had leased from Aramco Gas Pipelines Co and would retain a 51 per cent stake in the leased entity.

BlackRock and Hassana will hold a 49 per cent stake in the pipeline entity for 20 years. Meanwhile, adding that the deal had unveiled additional values of Aramco asset, Aramco said in a statement, “The deal has attracted interest from a wide range of worldwide investors, highlighting the compelling investment opportunity”.