April 12, 2021
Latham & Watkins advised EIG, a leading
institutional investor to the global energy sector and one of the world’s
leading infrastructure investors, on its acquisition of a 49% equity stake in
Aramco Oil Pipelines Company (Aramco Oil Pipelines), a joint venture formed
with Saudi Arabian Oil Co. (Aramco) to hold a 25-year lease over Aramco’s
stabilized crude oil pipeline network. The pipeline network, which includes all
of Aramco’s existing and future stabilized crude pipelines in the Kingdom of
Saudi Arabia, connects oilfields to downstream networks.
As part of the transaction, Aramco will
lease the usage rights in its pipeline network to Aramco Oil Pipelines, and
Aramco Oil Pipelines will grant back to Aramco the exclusive right to use,
transport through, operate, and maintain the pipeline network for 25 years. In
exchange, the joint venture will receive a quarterly, volume-based tariff,
payable by Aramco and backed by minimum volume commitments. Aramco will at all times retain operational
control of the pipeline network and will assume all operating and capital
The transaction is valued at approximately
US$12.4 billion for EIG’s stake, with Aramco holding the remaining 51% stake in
the new entity, indicating a total equity value of Aramco Oil Pipelines of
approximately US$25.3 billion.
The Latham team was led by London
infrastructure partners Conrad Andersen and John Guccione, and included London
capital markets partner Dean Naumowicz.
The deal follows similar asset sales by
ADNOC in the UAE. Andersen advised a consortium led by Global Infrastructure
Partners on the bridge financing (and bond take-out) of the acquisition of the ADNOC gas pipelines last year.