The Saudi energy company, Saudi Aramco, has agreed to sell a $12.4 billion stake in Aramco Oil Pipelines Co. - a newly formed division - to investors led by EIG Global Energy LLC. The latter company will acquire 49% in Aramco Oil Pipelines Co. which leaves Aramco – the parent company - with 51% stake in the newly formed pipeline unit.
This deal is part of a plan to open up to foreign investors and the money will be used to diversify Saudi’s economy. Asset disposals also will go to help the company maintain its payouts to shareholders, investment in oil fields, and refinery projects.
Aramco has become the third-largest company by market value just behind Apple Inc and Microsoft Corp., which has helped the company pay the highest dividend of any listed company, last year. “Aramco’s strong capital structure will be further enhanced with this deal, which in turn will help maximize returns for our shareholders”, Aramco's Chief Executive Officer said in a statement.
As part of the transaction, Aramco Oil Pipelines Co. will lease the rights to use Aramco's oil pipeline network for a 25 year period. However, Aramco will retain ownership and operational control of the network.
References:
1) Dummett, B., & McFarlane, S. (2021, April 09). Aramco strikes $12.4 Billion oil PIPELINE deal with Eig-led Group. Retrieved April 09, 2021, from https://www.wsj.com/articles/aramco-to-sell-49-stake-in-oil-pipelines-to-consortium-led-by-eig-mubadala-11617999881
2) Freitas Jr, G. (2021, April 09). Aramco Selling $12.4 Billion Stake in Pipeline Rights Unit. Retrieved April 09, 2021, from https://www.bloomberg.com/news/articles/2021-04-09/aramco-selling-12-4-billion-stake-in-oil-pipeline-rights-unit
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