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Saudi Aramco, the world’s biggest oil company, is discussing with banks the idea to offer the potential buyers of its pipeline business a staple financing package of up to US$10 billion, Reuters reported on Wednesday, citing three sources.
Saudi state-controlled giant Aramco is looking to monetize assets as its oil revenues and profits—and as an extension, Saudi Arabia’s income from oil—have drastically fallen over the past year, due to the crash in global oil demand and prices, and the OPEC+ production cut pact aimed at propping up oil prices.
Reports emerged as early as in October that Aramco was in early talks to potentially structure a deal worth more than US$10 billion to sell a part of its pipeline business to asset managers, including the world’s biggest, BlackRock.
According to Reuters sources, now Aramco’s potential investors in the pipeline unit, including BlackRock, are also discussing with banks the possible financing package for the acquisition. A loan of up to US$10 billion would cover a large part of the value of the pipeline assets.
Another major oil producer in the Gulf, the United Arab Emirates (UAE), has already moved to monetize energy infrastructure assets. Abu Dhabi National Oil Company (ADNOC) signed in June last year a US$20.7-billion deal with six international companies for the acquisition of a minority stake in Adnoc Gas Pipeline Assets.
Under the terms of the deal, Global Infrastructure Partners, Brookfield Asset Management, Singapore’s sovereign wealth fund, the Ontario Teachers’ Pension Plan Board, Snam, and NH Investment and Securities acquired a 49-percent interest in ADNOC Gas Pipeline Assets, a new subsidiary of the UAE’s national oil and gas company.
Saudi Aramco, for its part, is looking to raise more money via additional share offerings in coming years, Saudi Crown Prince Mohammed bin Salman said last month.
“There are going to be IPOs by Aramco in the following years,” Bloomberg quoted the crown prince as saying at the Future Investment Initiative conference in Saudi Arabia’s capital Riyadh.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com