Aramco seals $11 billion Jafurah midstream lease-back agreement

One of the largest and most influential energy companies in the world, Aramco, has sealed a deal worth $11 billion for the Jafurah midstream lease in the Kingdom of Saudi Arabia. The Middle East region has seen significant foreign investments recently, after several nations in the area shifted their approach to the international investment opportunities presented to them. For years, countries like Saudi Arabia have been closed to foreign investment and opted to maintain control of their markets; however, recent events have led those nations to open up their markets to outside investment.

The deal reflects a positive outlook for gas demand in the Kingdom of Saudi Arabia

Aramco is one of the world’s leading integrated energy and chemicals companies with assets in several nations around the world. The company has signed an $11 billion lease and leaseback deal involving its Jafurah gas processing facilities in the Kingdom. The lease will be purchased via a consortium of international investors, led by Global Infrastructure Partners (GIP), a part of BlackRock.

The Jafurah gas processing facility contains 229 trillion standard cubic feet of raw gas and 75 billion Stock Tank Barrels of condensate, making it the largest non-associated gas development in the Kingdom of Saudi Arabia.

The deal is a key component of the company’s goals to increase gas production capacity by 60% between 2021 and 2030. The billion-dollar deal enables a newly-formed subsidiary, Jafurah Midstream Gas Company (JMGC), to lease development and usage rights for the Jafurah Field Gas Plant and the Riyas NGL Fractionation Facility. Aramco’s President & CEO released a statement outlining the importance of the site.

“Jafurah is a cornerstone of our ambitious gas expansion program, and the GIP-led consortium’s participation as investors in a key component of our unconventional gas operations demonstrates the attractive value proposition of the project. This foreign direct investment into the Kingdom also highlights the appeal of Aramco’s long-term strategy to the international investment community. As Jafurah prepares to start phase one production this year, development of subsequent phases is well on track. We look forward to Jafurah playing a major role as a feedstock provider to the petrochemicals sector, and supplying energy required to power new growth sectors, such as AI data centers, in the Kingdom.” – Amin H. Nasser, Aramco President & CEO

Global Infrastructure Partners leads foreign investment in the Kingdom of Saudi Arabia’s energy sector

The deal enables the Global Infrastructure Partners to hold a minority stake of 49%, while Aramco holds the majority stake of 51%. The transaction is subject to customary closing conditions and is expected to close as soon as practicable.

Several nations around the world have welcomed outside investment from the private sector. Aramco is a vast corporation that holds significant assets in the midstream sector and has welcomed the addition of the Global Infrastructure Partners to the upstream sector in the Kingdom.

“We are pleased to deepen our partnership with Aramco with our investment in Saudi Arabia’s natural gas infrastructure, a key pillar of global natural gas markets. Today’s announcement builds upon BlackRock and GIP’s longstanding relationship with Aramco to serve growing market needs for cleaner fuels, energy security and energy affordability.” – Bayo Ogunlesi, Chairman and CEO of Global Infrastructure Partners

The Middle Eastern region is set to become a major contributor to the global energy sector

The global midstream sector has seen several key hubs experiencing significant traffic increases, underlining the importance that global cooperative projects have in the international economy. Saudi Arabia’s midstream sector has the potential to become a major player in the global energy supply with the billion-dollar deal announced recently. Aramco is set to operate the lease for the next 20 years, according to the details of the transaction. Saudi Arabia is set to dominate the global midstream sector once the deal navigates the required regulatory hurdles.