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Saudi Aramco has approached potential bidders to sell a part of its pipeline business worth ~$17bn according to Reuters. The oil giant, through its advisors JPMorgan and Goldman Sachs, is looking to tap players including American private equity and infrastructure funds and Chinese and South Korean state-backed funds to seal the deal in the next few weeks. The deal could include $3.5bn of equity and the rest in the form of bank loans. Saudi Aramco had raised ~$12bn earlier this year by leasing usage rights of its stabilized crude oil pipeline network to a consortium led by EIG Global Energy Partners (EIG). Last year Abu Dhabi National Oil Co (ADNOC) had also raised ~$10bn after it sold a part of its natural-gas pipeline business. The potential buyers could include.
  • Consortium of investors who invested in ADNOC including Global Infrastructure Partners (GIP), Brookfield, Singapore sovereign wealth fund GIC and SNAM
  • China’s Silk Road
  • Chinese state-backed investment fund CNIC Corp
  • South Korea’s sovereign wealth fund Korean Investment Corp (KIC)
  • NH Investment & Securities

In other related news, Aramco is also in advanced negotiations to buy a 20% stake in India’s Reliance Industries Ltd’s (RIL) oil refinery business worth ~$20-25bn through an all-stock deal in the coming weeks. Based on Aramco’s market valuation of ~$1.9tn, RIL would get ~1% share of Aramco. The negotiations which have been going on for 2 years slowed due to the pandemic. The closure of the deal would potentially benefit both the companies. The deal would result in a degree of assurance to Aramco’s sale of crude to India while increasing its refining capability. RIL would benefit by an assured supply of crude for its oil refinery.

Aramco’s 0.946% 2024s were down 0.18 to trade at 99.71 while its 3.25% 2050s were up 0.14 to trade at 97.38. RIL’s 3.667% 2027s and 4.875% 2045s were up 0.02 and 0.21 to trade at 110.19 and 126.52 respectively.

For the full story on the Pipeline Stake, click here and for the full story on deal with RIL, click here
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