A consortium led by BlackRock and Saudi Arabia-based asset manager Hassana Investment Company has secured one of the world’s largest energy infrastructure deals, buying a 49 percent stake in Saudi Aramco’s newly-formed subsidiary, Aramco Gas Pipeline Company, for $15.5 billion.
The deal entails a lease and leaseback of the usage rights to Aramco’s natural gas pipeline network over a 20-year period. As Infrastructure Investor understands, the pipeline network in question spans 5,000 kilometres and the $15.5 billion price tag is inclusive of debt and equity.
The move mirrors BlackRock’s February 2019 partnership with KKR to acquire a 40 percent stake in the Abu Dhabi National Oil Company’s oil pipelines for $4 billion. The pair later brought in the Singaporean sovereign wealth fund GIC that July to purchase an additional 6 percent in ownership. Infrastructure Investor understands a similar move to bring in other international investors into the latest consortium is underway.
While the ADNOC deal was pursued through BlackRock’s Global Energy & Power Infrastructure Fund series, the group declined to comment when asked which fund supported the deal.
Aramco, the world’s largest oil company, stated that the deal will work to strengthen its balance sheet and provide “significant progress” with its asset optimisation programme. This deal marks its second such infrastructure transaction this year, having sold a 49 percent equity stake in the company’s oil pipelines to a consortium led by EIG Global Energy Partners in June. In both deals, Aramco maintained its ownership and operational control of the pipeline networks.
This move is the latest in a privatisation wave in the infrastructure and energy sectors in Saudi Arabia. Aramco in particular helped launch this movement with its IPO in 2016, helping the Saudi government raise billions for its sovereign wealth fund.
BlackRock’s investment is a vote of confidence in the future of gas as a transition fuel, and BlackRock chief executive Larry Fink believes the investment to be helpful towards the country’s energy future.
“Aramco and Saudi Arabia are taking meaningful, forward-looking steps to transition the Saudi economy toward renewables, clean hydrogen and a net-zero future,” Fink said in a statement. “Responsibly-managed natural gas infrastructure has a meaningful role to play in this transition.”