A Major Lease-and-Leaseback Agreement Boosts Saudi Arabia's Gas Production
"Saudi Aramco agrees to a $11 billion gas deal with a group led by BlackRock in the Jafurah region"
In a significant move for Saudi Arabia's energy sector, Saudi Aramco, the national petroleum and natural gas company, has signed an $11 billion lease-and-leaseback agreement with a consortium led by Global Infrastructure Partners (GIP), a part of BlackRock. This deal marks a substantial foreign direct investment in the Kingdom's energy sector.
The agreement focuses on the Jafurah gas processing facilities, which include the Jafurah Field Gas Plant and the Riyas NGL Fractionation Facility. These assets are crucial for Aramco's strategy to boost gas production, as they are central to Aramco's plan to increase gas production capacity by 60 percent between 2021 and 2030 to meet rising demand.
Under the terms of the agreement, a newly formed company, Jafurah Midstream Gas Company (JMGC), will lease these assets and then lease them back to Aramco for 20 years. Aramco retains a 51 percent stake in JMGC, while the consortium holds the remaining 49 percent.
The deal has attracted significant interest from global investors, with co-investors from Asia and the Middle East participating. The participation of the GIP-led consortium as investors in a key component of Aramco's unconventional gas operations demonstrates the attractive value proposition of the project.
The transaction is expected to close once customary conditions are met. Bayo Ogunlesi, GIP's chairman and CEO, expressed pleasure about deepening the partnership with Aramco in Saudi Arabia's natural gas infrastructure. The deal builds upon the strong existing relationship between Aramco and BlackRock, as evidenced by BlackRock co-leading a consortium of investors in a separate minority investment in Aramco Gas Pipelines Co. in 2022.
Jafurah, the Kingdom's largest non-associated gas field, holds an estimated 229 trillion cubic feet of raw gas and 75 billion stock tank barrels of condensate. Jafurah is preparing to start phase one production this year, and development of subsequent phases is well on track. Amin H. Nasser, Aramco president and CEO, stated that Jafurah is a cornerstone of Aramco's ambitious gas expansion program.
The strategic investment brings significant foreign direct investment into Saudi Arabia's energy sector, highlighting the appeal of Aramco's gas expansion strategy. It also underscores the importance of natural gas in global energy security and affordability, aligning with Saudi Arabia's Vision 2030 to diversify its economy and reduce oil dependence.
Moreover, the agreement will help optimize Aramco's asset portfolio and capture additional value from Jafurah's development. The transaction secures one of the largest foreign direct investments in the Kingdom's energy sector, making it a substantial investment that can have positive economic impacts on both Saudi Arabia and the involved parties.
In summary, the $11 billion lease-and-leaseback agreement between Saudi Aramco and the GIP-led consortium represents a major strategic move in Saudi Arabia's energy sector, enhancing its natural gas production capabilities and reinforcing its global energy market presence. The participation of global investors in the Jafurah deal highlights the appeal of Aramco's long-term strategy to the international investment community.
- The lease-and-leaseback agreement between Saudi Aramco and the GIP-led consortium is a significant foreign direct investment in Saudi Arabia's energy sector.
- The deal focuses on the Jafurah gas processing facilities, which are central to Aramco's plan to increase gas production capacity.
- The agreement has attracted global interest, with co-investors from Asia and the Middle East participating.
- The strategic investment will optimize Aramco's asset portfolio and capture additional value from Jafurah's development.
- The transaction is expected to close and will secure one of the largest foreign direct investments in Saudi Arabia's energy sector.
- The deal aligns with Saudi Arabia's Vision 2030 to diversify its economy and reduce oil dependence, emphasizing the importance of natural gas in global energy security and affordability.
