Saudi Aramco has concluded an $11 billion lease-and-leaseback agreement with a consortium led by BlackRock, facilitating an immediate cash influx while maintaining operational control over essential gas midstream assets, the company announced.
As part of this arrangement, a new entity named Jafurah Midstream Gas Company (JMGC) will lease the rights for the development and operation of the Jafurah Field Gas Plant along with the Riyas NGL Fractionation Facility.
JMGC will subsequently lease these facilities back to Aramco for a duration of 20 years, during which it will earn tariff payments for exclusive rights to process and treat raw gas extracted from Jafurah.
Aramco to maintain a 51% interest in JMGC
Aramco will own a 51% share in JMGC, with the remaining 49% held by the investor consortium led by Global Infrastructure Partners (GIP), a subsidiary of BlackRock.
The Jafurah initiative, valued at over $100 billion and estimated to contain around 229 trillion standard cubic feet of raw gas, along with 75 billion stock tank barrels of condensate, stands as the most significant non-associated gas development project in the kingdom.
This project is pivotal to Aramco’s goal of increasing gas production by 60% by 2030 compared to figures from 2021.
Amin H. Nasser, president and CEO of Aramco, stated, “Jafurah is integral to our ambitious gas expansion strategy, and the involvement of the GIP-led consortium… showcases the considerable value proposition of this project. This foreign direct investment reflects the attractiveness of Aramco’s long-term plans to the global investment landscape.”
He added that production from phase one is expected to commence this year, with subsequent phases on schedule.
Bayo Ogunlesi, chairman and CEO of GIP, expressed, “We are excited to enhance our partnership with Aramco through this investment in Saudi Arabia’s natural gas infrastructure… building on the longstanding collaboration between BlackRock, GIP, and Aramco.”
This transaction bolsters Aramco’s drive to optimize its infrastructure, indicating confidence in the increasing demand for gas within the kingdom.
It is aligned with similar lease-and-leaseback arrangements executed previously, like the minority stake sale in Aramco Gas Pipelines Company in 2022, reinforcing a strategy that allows for capital acquisition while retaining operational control.
For more insights: Saudi Aramco explores asset sales to generate funds, sources report