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Saudi giant Aramco secures $ 12.4 billion in pipeline deal

Saudi Arabian oil giant Aramco will earn $ 12.4 billion thanks to an agreement with a US fund on the use of its pipeline network.

Saudi Arabia, the world’s largest oil exporter, is struggling to attract foreign investment and diversify its economy.

Late on Friday, the company announced the signing of an agreement to create a joint venture with a consortium led by the US fund EIG Global Energy Partners, which will own 49% compared to 51% for Aramco.

The joint venture, Aramco Oil Pipelines Company, will lease Aramco’s pipeline network for 25 years, the oil giant added in a statement, stating that it will retain “full ownership and control of operations” of the network.

The deal is expected to earn Aramco $ 12.4 billion (about € 10.42 billion), which in return will pay the joint venture user fees on the volume of crude that transits the network, without quantity restrictions.

In recent years, Aramco has become the spearhead of the diversification of the country’s economy, highly dependent on hydrocarbons and where oil revenues finance part of the megaprojects of Crown Prince Mohamed bin Salmán.

In the context of the covid-19 pandemic that affects the demand for oil and accentuates the fall in prices, Saudi Arabia asked large companies at the end of March for an additional effort to stimulate the private sector, within a mega investment plan called “Shareek” (“partner” in Arabic).

– “New opportunities” –

The agreement on the use of its pipeline network “reinforces Aramco’s catalytic role in attracting significant foreign investment to the kingdom,” the company said in its statement, as Saudi Arabia struggles to attract foreign funds.

Aramco did not specify the names of the other companies that make up the consortium.

“We are seizing new opportunities strategically, in line with the Shareek investment program,” Aramco CEO Amin Naser said in the statement, hailing a “significant transaction” that “will maximize shareholder benefits.”

In March, the company announced a 44.4% drop in its net profit in 2020, to 49,000 million dollars (41,000 million euros), weighed down by the fall in oil prices. These results weigh on Saudi finances.

Despite the situation, Aramco has paid out $ 75 billion in dividends to its shareholders, as it promised to do at the time of its IPO in 2019.

Aramco’s dividend payments help the Saudi government, the company’s main shareholder, manage the country’s huge budget deficit.

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