Saudi Aramco aims to raise at least $17 B from gas pipeline
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, sources familiar with the matter said.
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 $3.5 billion of equity and the remainder will be funded by bank debt, one source said, while another source said the transaction size could top $20 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. (Additional reporting by Stephen Jewkes in Milan, Cynthia Kim in Seoul, Kane Wu in Hong Kong and Anshuman Daga in Singapore; editing by David Evans)