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Saudi Aramco plans to get USD17 bn from the sale of a significant minority stake in its gas pipelines

August 17/2021

MOSCOW (MRC) -- Saudi Aramco is looking to raise at least USD17 billion from the sale of a significant minority stake in its gas pipelines, higher than the USD12.4 billion raised from its oil pipeline deal, sources familiar with the matter said, said Hydrocarbonprocessing.

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, they said.

The deal size may include USD3.5 billion of equity and the remainder will be funded by bank debt, one source said, while another source said the transaction size could top USD20 billion. Saudi Arabia is the world's sixth largest gas market, according to Aramco, whose Master Gas System (MGS) derives value from 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," said one source familiar with deal, explaining why the gas deal may generate higher proceeds. The source said many industries will shift to gas under the economic Vision 2030, meaning domestic gas demand will rise.

Aramco is working with JPMorgan and Goldman Sachs on the deal to tap potential buyers, sources have said. The companies tapped include the ones who took part in the stake sale process for Abu Dhabi National Oil Co's gas pipelines, which was bought by a consortium of investors including Global Infrastructure Partners (GIP), Brookfield, Singapore sovereign wealth fund GIC and European gas infrastructure owner and operator SNAM.

Aramco, JPMorgan and Goldman declined to comment. Brookfield and SNAM declined to comment. GIP did not immediately respond to a request for comment.

Other 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, sources said. KIC declined to comment, while the other companies did not respond to a Reuters request for comment.

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.

As per MRC, Saudi Aramco, the world's largest oil company, said Aug. 8 that its hydrocarbons production fell 8% to 11.7 million boe/d in the second quarter from the year-earlier period due to OPEC+ cuts, but its profit surged almost four times thanks to higher oil prices and a recovery in worldwide demand. Net income soared to USD25.5 billion in the second quarter from USD6.6 billion a year earlier, the company said in an earnings statement.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco's value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, ethylene, propylene, Saudi Aramco, Saudi Arabia.
Category:General News
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