BlackRock-led group in talks to raise around $10.3 billion for Aramco deal, sources say
FILE PHOTO: A specialist trader works at the post where BlackRock is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 21, 2022. REUTERS/Brendan McDermid/File Photo
DUBAI : A group of investors led by BlackRock's Global Infrastructure Partners is in talks with lenders to secure up to $10.3 billion in financing for Aramco's Jafurah infrastructure deal, two sources with direct knowledge of the matter told Reuters.
Banks including JPMorgan and Japan's Sumitomo Mitsui Banking Corporation are in talks to participate in the transaction, the two sources said, which will allow Aramco to raise cash upfront in return for steady payments over time.
The debt financing will be split into two parts, a short-term and a long-term loan, said the people, declining to be named because the matter is not public. Aramco, BlackRock, JPM and SMBC declined to comment.
Under the deal, a newly formed subsidiary, Jafurah Midstream Gas Company (JMGC), will lease development and usage rights for gas processing facilities around the Jafurah gas development and lease them back to Aramco for 20 years.
Aramco, the world's biggest oil company, will retain a 51 per cent stake in JMGC, with the remaining 49 per cent held by the investor group.
The company could also raise between $3 billion and $4 billion from a sale of Islamic bonds, sources told Reuters, following a $5 billion bond issuance in May. It drew more than $16.5 billion in orders on Wednesday for the sukuk, expected to price later in the day.
The deal also reflects Saudi Arabia's broader energy strategy. By displacing crude oil in domestic power generation, more barrels will be available to export, as feedstock for petrochemicals, and to power emerging sectors such as artificial intelligence data centres.
The GIP consortium is injecting about $1.8 billion of their own funds into the transaction, the two sources said.
Roughly three-quarters of the debt financing will have a seven-year tenor - and could be refinanced via bonds - and the rest will be due in 19 years, one of the sources said.
Chinese banks have shown interest in helping to finance the short tenor, the source added. Goldman Sachs, Citi, Mizuho and MUFG have also signalled interest in participating in the financing, a third source told Reuters.
Citi, MUFG and Goldman Sachs declined to comment, while Mizuho did not immediately respond to a request for comment.
The structure is similar to deals done by Aramco in 2021 and 2022 for its oil and gas pipeline networks.
The Jafurah field, estimated to contain 229 trillion standard cubic feet of raw gas, is the largest non-associated gas development in Saudi Arabia and a cornerstone of Aramco's plan to boost gas output by 60 per cent by 2030 from 2021 levels.
The infrastructure investment is expected to support the construction of more than 1,500 km of pipelines and processing facilities.
