Saudi Aramco, the world’s largest oil producer, is the official Saudi Arabian Oil Company. It is a Saudi Arabian public petroleum and natural gas company based in Dhahran. The consortium led by the US-based EIG Global Energy Partners closed a $12.4 billion Aramco pipeline deal. The deal has a group including Saudi Arabia, China, the United Arab Emirates, the United States, and Korea. The investors in the deal are Silk Road Fund, Abu Dhabi’s Mubadala Investment Company, and Samsung Asset Management.
The consortium partakes 49% of the shares, while 51% of the shares remain with Aramco.
The deal comes after optimistic raise of $6 billion in Sukuk’s debut. The recent lock-in of the oil behemoth offers massive dividends by entering international debt markets with its first issue of US dollar-denominated Sukuk.
The company committed a $75 billion dividend which helps the government with the sales of $1 billion at 65 basis points (bps) over US Treasuries (UST), $2 billion at 85 bps over UST, and $3 billion at 120 bps over UST in tranches of three, five and ten years respectively.
Abu Dhabi holds a vital position in the Organization of Petroleum Exporting Countries association. The new subsidiary, Aramco Oil Pipelines Co., will have controlling rights for 25 years in the tariff payments for oil exports by the oil-producing giant.
The natural gas pipelines also seek a similar deal that offers financial support, which sells the company’s non-core assets as planned. The funds received from such a deal will help the company provide a $75 billion annual dividend that primarily benefits the government.
The deal is the largest since its record $29.4 billion initial public offerings in 2019. The kingdom has commenced luring foreign investments, ceding some of the oil assets for profits far-fetched till now.
The pipelines will offer crude oil production representing the worldwide output of one in every eight barrels. The company has over 90 pipelines throughout the country that includes a connecting east-west oil pipeline to the oil fields in the country’s eastern province to the port at Yanbu along the Red Sea.
The deal sets a new threshold for such global infrastructural transactions, which utilizes the company’s infrastructure to be a value addition for the people involved and the company.
Blair Thomas, EIG’s Chairman & CEO, said: “We believe this is the marquee infrastructure transaction globally, and we are pleased to see that so many leading international investors agree with us.”
The company also posted its Q1 report representing a 30% year-on-year increase in net income to $21.7 billion with an $18.8 billion dividend offer in Q2. The oil producer linked the growth to better economy and high oil prices in the first quarter.