Saudi Aramco is looking to raise at least $17 billion from the sale of a significant minority stake in its gas pipelines, higher than the $12.4 billion raised from its oil pipeline deal. Potential bidders including North American private equity and infrastructure funds, as well as state-backed funds in China and South Korea have been approached by Aramco through its advisors before a formal sale process kicks off in the next few weeks. The deal size may include $3.5 billion of equity and the remainder will be funded by bank debt.
Saudi Arabia is the world’s sixth largest gas market. This is according to Aramco, whose Master Gas System (MGS) derives valuefrom a range of gas deposits and helps deliver it to consumers. The gas deal is about the long-term view of gas utilization and consumption in Saudi Arabia. Many industries will shift to gas under the economic Vision 2030. This means that the domestic gas demand will rise. Aramco is working with JPMorgan and Goldman Sachs on the deal to tap potential buyers. The companies tapped include the ones who took part in the stake sale process for Abu Dhabi National Oil Co’s gas pipelines.
Potential bidders showing interest in the Aramco sales process include China’s Silk Road, Chinese state-backed investment fund CNIC Corp, South Korea’s sovereign wealth fund Korean Investment Corp (KIC) and NH Investment & Securities. Aramco, similar to Abu Dhabi National Oil Co (ADNOC), used a lease and lease-back agreement to sell a 49% stake of newly formed Aramco Oil Pipelines Co to the buyer and rights to 25 years of tariff payments for oil carried on its pipelines.