Aramco closes gas pipeline deal with global investor consortium

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Saudi Arabian Oil Company (“Aramco”) and an international investor consortium, led by affiliates of BlackRock and Hassana, announced the successful closing of the lease and leaseback deal previously announced on December 6, 2021. The consortium has acquired 49% stake in Aramco Gas Pipelines Company, a subsidiary of Aramco, for $15.5 billion. The consortium comprises leading institutional investors including, amongst others, Keppel Infrastructure Trust, Silk Road Fund, and China Merchants Capital.

This long-term investment by the consortium represents further progress in Aramco’s portfolio optimization program and highlights the strong investment opportunities presented by Aramco’s significant infrastructure assets. It also underlines Aramco’s strong long-term outlook and the appeal of the Kingdom of Saudi Arabia to leading institutional investors.

As part of the transaction, first announced in December 2021, Aramco Gas Pipelines Company and Aramco entered into a 20-year lease and leaseback arrangement in connection with Aramco’s gas pipeline network. Under this arrangement, Aramco Gas Pipelines Company will receive a tariff payable by Aramco for the specified gas products that flow through the network, backed by minimum commitments on throughput. Aramco retains a 51% majority stake in Aramco Gas Pipeline Company, and also retains full ownership and operational control of the gas pipeline network. The transaction does not impose any restrictions on Aramco’s production volumes.

The announcement follows the closing of a $12.4 billion infrastructure transaction in connection with Aramco’s stabilized crude oil pipeline network in June 2021.

Concurrent with closing of this transaction, Aramco has also signed a memorandum of understanding (MoU) with BlackRock, to explore joint opportunities in future energy transition projects related to low carbon energy infrastructure. The MoU reinforces the relationship with BlackRock, enhancing opportunities for possible future collaborations.

Aramco President & CEO, Amin H. Nasser, said: “This agreement is our second landmark infrastructure transaction in less than a year and another major step forward in our long-term value creation strategy. The participation of the consortium led by BlackRock and Hassana underlines the appeal of Aramco’s portfolio to leading global investors as Saudi Arabia’s economic transformation builds momentum, requiring a robust energy infrastructure and network that are vital to meet the needs of an expanding industrial sector.

At the same time as Aramco raises gas production and seeks new opportunities in low-carbon energy sources over the next decade, the importance of our energy infrastructure in relation to global energy security and reliability is expected to grow in significance.”

Abdulaziz M. Al Gudaimi, Aramco Senior Vice President of Corporate Development, said: “We remain focused on maximizing the potential of our assets and assessing new investment opportunities to further enhance our robust balance sheet. The gas infrastructure transaction with BlackRock and Hassana is a testament of the relationship with the global investors and emphasizes gas as a key pillar to grow in domestic and international markets.”

Larry Fink, Chairman and CEO of BlackRock, said: “We are pleased to close this landmark transaction and deepen our partnership with Aramco by signing a Memorandum of Understanding to develop low carbon energy infrastructure together. Getting to a net zero world will not happen overnight. 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, and we look forward to our future collaboration.”

Saad A. AlFadly, CEO of Hassana Investment Company, added: “We are delighted to achieve closing of this landmark transaction which highlights our focus to invest in critical infrastructures in the Kingdom of Saudi Arabia. We look forward to working with our partners at Aramco and BlackRock to make this a successful long-term investment.”

Source: Aramco

Aramco awards contracts worth $10bn for vast Jafurah field development, as unconventional resources program reaches commercial stage

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The Saudi Arabian Oil Company (“Aramco” or “the Company”) announced the start of development of the vast Jafurah unconventional gas field, the largest non-associated gas field in the Kingdom of Saudi Arabia. The Company has awarded subsurface and Engineering, Procurement and Construction (EPC) contracts worth $10 billion, with capital expenditure at Jafurah expected to reach $68 billion over the first 10 years of development.

It is a significant milestone both for the commercialization of unconventional resources in Saudi Arabia and the expansion of Aramco’s integrated gas portfolio, which will provide additional feedstock to support growth of the Company’s high-value chemicals business, complement its focus on low-carbon hydrogen production and help reduce emissions in the domestic power sector by providing a cleaner-burning alternative to liquid fuel. 

With an estimated 200 trillion standard cubic feet of gas in place, the Jafurah basin hosts the largest liquid-rich shale gas play in the Middle East. This shale play covers an area measuring 17,000 square kilometers and production of natural gas at Jafurah is expected to ramp up from 200 million standard cubic feet per day (scfd) in 2025 to reach a sustainable gas rate of two billion scfd of sales gas by 2030, with 418 million scfd of ethane and around 630,000 barrels per day of gas liquids and condensates, which are essential feedstock for the growing petrochemical industry. It will make Saudi Arabia one of the world’s largest natural gas producers.

HRH Prince Abdulaziz bin Salman Al Saud, Minister of Energy for the Kingdom of Saudi Arabia, said: “I would like to thank the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud, and HRH Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince, Deputy Prime Minister and Minister of Defense, for their ongoing support of the Kingdom’s energy sector. The development of Jafurah will positively contribute to the Kingdom’s energy mix and it has been made possible thanks to close co-operation between more than 17 different agencies. The government is committed to the empowerment of national companies such as Aramco and no other energy company in the world is empowered to the same extent by the state, or by the Ministry of Energy which oversees the concession to develop the Kingdom’s hydrocarbon resources.”

The project is a key component of the Company’s long-term strategy and Aramco expects total overall lifecycle investment at Jafurah to exceed $100 billion. Through its unconventional gas program at the Jafurah, North Arabia and South Ghawar fields, the Company expects to create more than 200,000 direct and indirect jobs. 

Amin H. Nasser, Aramco President and CEO, said: “This is a pivotal moment in the commercialization of Saudi Arabia’s vast unconventional resources program. It is a breakthrough that few outside the Kingdom thought was possible, and which has positive implications for energy security, economic development and climate protection. Gas has a critical role to play in the energy transition and it will help significantly reduce emissions in the domestic energy sector, while providing a feedstock for low-carbon hydrogen and ammonia. It will also allow Aramco to tap into high-value feedstocks for use in the expanding Downstream petrochemicals industry and our aim is to significantly increase our gas production capacity over the next decade to meet demand growth.”

Aramco recently announced its ambition to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions across its wholly-owned operated assets by 2050. Jafurah is expected to contribute to Saudi Arabia’s goal of producing half of its electricity from gas and half from renewables as the Kingdom pursues its own 2060 net-zero target. 

At peak production, Aramco’s unconventional gas program is expected to replace around half a million barrels of crude oil per day that would otherwise have been used for domestic consumption. The Jafurah gas development alone is expected to replace more than 300,000 barrels of crude oil per day at peak production. 

Nasir K. Al-Naimi, Aramco’s Upstream Senior Vice President, said: “The development of Jafurah is a game-changer for our Unconventional Resources program. It will be one of the most modern, cost-efficient shale development schemes in the industry and observe the highest environmental and safety standards. Jafurah will be a key enabler of our ambitions moving forward, and we continue to explore new fields, re-evaluate existing ones and evaluate potential joint investment opportunities in both natural gas and natural gas liquids as we pursue our goal of developing an integrated global gas portfolio to meet long-term energy and petrochemicals demand.” 

Aramco has awarded 16 subsurface and EPC contracts valued at $10bn for the Jafurah Gas Plant and gas compression facilities, as well as infrastructure and related surface facilities. These contracts were awarded to domestic and international service companies and involve several projects to enable development of subsurface and surface components of the Jafurah program. 

This will allow for the reliable delivery of gas and condensates through a dedicated surface network that includes a gas processing plant, a gas compression system and network of around 1,500 kilometers of main transfer pipelines, flow lines and gas gathering pipelines. The program also includes construction of the Jafurah Bulk Supply Point, transmission lines, power interconnection for Jafurah Gas Plant and new cogeneration plant facilities. 

In line with Aramco’s Digital Transformation Program, development of Jafurah will incorporate advanced Fourth Industrial Revolution (4IR) technologies, including Industrial Internet of Things (IIoT) and video analytics, to enhance construction, operation and safety. 

Aramco has awarded the majority of Jafurah subsurface contracts, in addition to engineering, material procurement and construction contracts, to contractors based in Saudi Arabia, in association with reputed international contractors and service providers. This is in line with the Company’s efforts to support development of the domestic energy sector and local supply chain partners. In addition, to drive domestic value creation and maximize long-term economic growth and diversification, the Jafurah development program will include an In-Kingdom Total Value Add (iktva) component. Aramco launched the iktva program in 2015 to facilitate development of a diverse, sustainable, and a globally competitive energy sector.

Source: Aramco

Aramco, Air Products, ACWA Power, and Air Products Qudra Sign Asset Acquisition and Project Financing Agreements for $12 Billion ASU/Gasification/Power Joint Venture in Jazan, Saudi Arabia

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Aramco, Air Products, ACWA Power and Air Products Qudra announced the signing and finalization of definitive agreements for the asset acquisition and project financing of the $12 billion air separation unit (ASU)/gasification/power joint venture (JV) in Jazan Economic City.

Aramco via its subsidiary Saudi Aramco Power Company (SAPCO) has a 20 percent share in the JV; Air Products 46 percent; ACWA Power 25 percent; and Air Products Qudra 9 percent. Moreover, Air Products’ total ownership position is 50.6 percent by owning an additional 4.6 percent through Air Products Qudra.

The JV is purchasing the ASUs, gasification, syngas cleanup, utilities and power assets from Aramco. The JV owns and operates the facility under a 25-year contract for a fixed monthly fee. Aramco will supply feedstock to the JV, and the JV will produce power, steam, hydrogen and other utilities for Aramco.

The JV serves Aramco’s Jazan Refinery, a megaproject to process 400,000 barrels per day of the crude oil to produce the main products such as ultra-light sulphur diesel, gasoline, and other products.

With the completion of these definitive agreements, all parties under the joint venture expect asset transfer and funding to occur during the month of October 2021. Air Products intends to conduct a public investor call at that time.

Mohammed Al Qahtani, Senior Vice President of Downstream, Aramco said: “We are very pleased to reach this significant milestone. Aramco originally built the world’s largest integrated gasification combined cycle (IGCC) complex to employ gasification technology for the first time in the Kingdom and to keep pace with the development of the Kingdom’s Southern Province industrially and economically. This JV is meant to be central to the self-sufficiency of our megaprojects at Jazan. We believe the JV will enhance the overall value of the refinery and integrated gasification combined cycle power plant, and aid in transforming the province by positioning Jazan Economic City for additional foreign investment and private sector involvement. In fact, we are pleased to have the Saudi Industrial Development Fund (SIDF) and 23 local and international lenders engaged in this transaction securing a total of $7.2Bn.  We are optimistic that future investment offers the potential to be a game-changer in the years ahead.”

Air Products Chairman, President and CEO, Seifi Ghasemi, said: “We are very proud to announce the finalization of the definitive agreements for this complex transaction and now move forward. This is a perfect fit with our growth strategy. It is a value-creating investment for Air Products and leverages our core syngas purification and industrial gas production capabilities. Most importantly, it is a privilege to further strengthen our relationship with Aramco, the world’s largest company, and to partner with ACWA Power and Qudra Energy in this megaproject, which supports the Kingdom’s Vision 2030 and building partnerships for mutual growth.”

Mohammad Abunayyan, Chairman of ACWA Power, said: “The successful financial agreement concluded today is the largest agreement of its kind in ACWA Power’s history and highlights our continued firm commitment to the Kingdom’s Vision 2030 and its strategic goals for the energy sector. A monumental shift is underway in Saudi Arabia’s energy sector, and we are proud of our partnership and close collaboration with Aramco and Air Products towards diversifying the energy mix and increasing the efficiency of the sector. Drawing on the pioneering expertise and capabilities of all joint venture partners, Jazan IGCC is set to be the largest integrated project for gasification and combined cycle energy production in the world. Bringing the most advanced technologies to the Kingdom, the Jazan project will push the boundaries. We are also exceptionally proud to add to ACWA Power’s track record in training and upskilling Saudi talent to meet the requirements of the sector.”

Source: Air Products

Saudi-Aramco-2

Samsung Engineering wins $1.85bn Aramco gas storage contract

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Samsung Engineering signed a $1.85bn contract for the Aramco HUGRS (Hawiyah Unayzah Gas Reservoir Storage) project.

The project is located at Hawiyah, 260km east of Saudi Arabia’s capital Riyadh, and includes gas injection facility of 1,500 million standard cubic feet per day (MMSCFD); and a gas reprocessing facility of 2,000 MMSCFD. It is a project to introduce surplus sales gas into existing well during winter and reproduce gas to match the increase in demand in the summer, due to regional characteristics, it said.

Samsung Engineering will execute the whole engineering, procurement and construction (EPC) process and expects the Aramco HUGRS to be completed in 2023.

The scope of work includes gas injection facility with booster compressors and injection compressors, gas reproduction facility with reproduction compressors and slug catchers as well as utilities and offsite facilities, it said.

“Samsung Engineering is confident in the success of this project, based on its rich local experience in Saudi Arabia and its strong partnership with the client. Since its first entry into Saudi Arabia in 2003, Samsung Engineering has carried out more than 30 projects worth about $15 billion, half of which are Aramco projects,” it said.

Samsung Engineering’s President & CEO Sungan Choi stated: “Samsung Engineering is honoured to receive this contract and believes that our previous regional experience, engineering excellence and partnership with the client lead to this order. Continuing to provide safe and quality projects, Samsung Engineering will ensure that this project will leave a mark in Saudi Arabia and will lead to build on our position in the Middle East overall.”

Source:http://bit.ly/37S7ihd