Aramco closes $15.5bn BlackRock-led gas pipeline deal

Saudi Aramco closed a deal to sell a stake in its natural-gas pipelines for $15.5bn and entered into a pact with BlackRock to explore low carbon energy projects.

An investor group, led by BlackRock, acquired a 49 per cent stake in Aramco Gas Pipelines Co. in a lease and leaseback deal in December, according to a statement. The consortium also comprised Keppel Infrastructure Trust, Silk Road Fund, China Merchants Capital, and Saudi Arabia’s state-owned Hassana Investment Co.

BlackRock’s investment comes even as chief executive officer Larry Fink puts pressure on firms to boost environmental, social and governance, or ESG, standards. Gas is a cleaner fuel than crude oil but still contributes to heating the plant.

“Getting to a net zero world will not happen overnight,” Fink said in the statement. “It requires us to shift the energy mix in incremental steps to achieve a green energy future. Bold, forward-thinking incumbents like Aramco have the technical expertise and capital to play a crucial role in this transformation.”

The 20-year arrangement “represents further progress in Aramco’s portfolio optimisation programme and highlights the strong investment opportunities presented by Aramco’s significant infrastructure assets,” according to the statement.

The deal is part of Saudi Arabia’s drive to sell assets and use the money to fund new industries from artificial intelligence to electric vehicles, while also increasing output of both oil and gas. In a similarly-structured transaction in April, Aramco sold a $12.4bn stake related to its oil pipelines to investors including Washington-based EIG.