The Energy giant Saudi Aramco has struck a $12.4 billion deal to sell a minority stake in a newly formed oil pipeline business to a consortium led by US-based EIG Global Energy Partners. The deal comes as the kingdom’s cash cow which seeks to monetise its once-untouchable assets to generate revenue for the Saudi government as it accelerates efforts to diversify the oil-reliant economy.
The company made a statement on Friday that upon closing the deal Aramco will receive upfront proceeds of around $12.4 billion, further strengthening its balance sheet through one of the largest energy infrastructure deals globally. It also added that as part of the transaction, a newly-formed Aramco subsidiary, Aramco Oil Pipelines Company, will lease usage rights in Aramco’s stabilised crude oil pipelines network for 25 years.
The announcement comes after the company posted consecutive falls in profits since it began disclosing earnings in 2019, piling pressure on government finances as Riyadh pursues multi-billion dollar projects to diversify the economy. Aramco posted a 44.4% slump in 2020 net profit due to lower crude prices last month.
Saudi Arabia’s world biggest crude exporter was hammered last year by low prices as the coronavirus pandemic weighed on global demand, prompting sharp production cuts. The energy giant said it stuck to its commitment of paying shareholders dividends worth $75 billion in 2020 which is an amount that exceeds the declared profit and available cash flow.