Aramco signs deal to lease gas pipeline with BlackRock and Saudi’s asset manager Hassana

Saudi's Aramco signed a US $15.5 billion lease and leaseback deal for its gas pipeline network with a consortium led by BlackRock and Saudi’s asset manager Hassana.

The deal comes amid Gulf oil producers are looking to optimise their assets by raising cash which includes also selling some of these assets.

Aramco said it will receive upfront proceeds of US $15.5 billion which will “strengthen its balance sheet.” 

“Aramco and Saudi Arabia are taking meaningful, forward-looking steps to transition the Saudi economy toward renewables, clean hydrogen, and a net zero future. Responsibly-managed natural gas infrastructure has a meaningful role to play in this transition,” said Larry Fink, Chairman and CEO of BlackRock.

Upon completion of the transaction, a newly  formed subsidiary, Aramco Gas Pipelines Company, will lease usage rights in Aramco’s gas pipelines network and lease them back to Aramco for a 20-year period, the company said in a statement.

Aramco Gas Pipelines Company will receive in return a tariff payable by Aramco for the gas products that will flow through the network, backed by minimum commitments on throughput.

“The deal unlocks additional value from Aramco’s diverse asset base and has attracted interest from a wide range of worldwide investors, highlighting the compelling investment opportunity,” the company said in a statement.

Aramco will hold a 51 percent stake in Aramco Gas Pipeline Company and the remaining  49 percent stake to investors led by BlackRock and Hassana.