Saudi Aramco said it has completed the sale of its 49% stake in Aramco Oil Pipelines Co. for $12.4 billion to a consortium led by Washington-based EIG Global Energy Partners as the world’s top oil producer steps up fund raising initiatives.
The consortium—which represents a broad section of investors from North America, Asia and the Middle East—also includes United Arab Emirates sovereign wealth fund Mubadala Investment, the Chinese government’s Silk Road Fund and Samsung Asset Management, according to a joint statement issued by Aramco and EIG on Friday.
Aramco will retain 51% ownership of Aramco Oil Pipelines—a newly formed entity with rights to 25 years of tariff payments for oil transported through the energy giant’s stabilized crude oil pipeline network—and full operational control of asset.
As part of the transaction, which was first announced in April, Aramco signed a 25-year agreement to lease back the pipeline. The deal does not impose any restrictions on Aramco’s actual crude oil production volumes, which is subject to the Saudi government’s decisions, it said.
“It is a significant milestone that reflects the value of our assets and paves the way forward for our portfolio optimization strategy,” Aramco President & CEO Amin H. Nasser said in a statement. “We plan to continue to explore opportunities to capitalize on our industry-leading capabilities and attract the right type of investment to Saudi Arabia.”
The divestment comes as Aramco accelerates fund raising to finance new investments and the hefty dividend payout to the Saudi government, its biggest shareholder. Last week, Aramco raised $6 billion from its first dollar-denominated Islamic bond sale.
Aramco’s finances have taken a hit last year after oil prices tumbled as the Covid
-19 pandemic dragged global demand. While the company’s first-quarter profit jumped 30% as oil prices recovered, the company’s free cash flow was insufficient to fund its $18.8 billion dividend obligation for the quarter.
“Given the positive signs for energy demand in 2021, there are more reasons to be optimistic that better days are coming,” Nasser said in a statement when the company released its first-quarter results in May. “And while some headwinds still remain, we are well-positioned to meet the world’s growing energy needs as economies start to recover.”