Saudi energy giant Aramco has concluded an $11 billion lease-and-leaseback agreement for its Jafurah gas processing facilities, partnering with a consortium of global investors led by funds managed by BlackRock, the world’s largest asset manager.
Under the agreement, a newly created entity, Jafurah Midstream Gas Company (JMGC), will oversee development and operation of the Jafurah Field Gas Plant and the Riyas NGL Fractionation Facility. These assets will be leased back to Aramco for 20 years, during which the firm will pay JMGC a tariff for exclusive processing rights to Jafurah’s raw gas, helping to meet Saudi Arabia’s rising domestic demand.
Jafurah is the Kingdom’s largest non-associated gas development, holding an estimated 229 trillion standard cubic feet of raw gas alongside 75 billion Stock Tank Barrels of liquids. The field is central to Aramco’s target of raising gas production capacity by 60% between 2021 and 2030 to meet growing demand at home and abroad.
Aramco will retain a 51% majority stake in JMGC, while the remaining 49% will be held by the investor consortium led by GIP. The structure of the deal means there will be no restrictions on Aramco’s production levels. Completion is expected once standard regulatory and closing requirements are met.
The transaction will give Aramco upfront proceeds of $11 billion, which the company says highlights the value potential of its investment programme. It also supports the optimisation of Aramco’s portfolio at a time when natural gas is becoming more important to the Kingdom’s long-term economic plans.
Amin H. Nasser, Aramco President & CEO, said: “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.”
The investment is also being seen as a vote of confidence in Saudi Arabia’s gas infrastructure. Bayo Ogunlesi, Chairman and CEO of GIP, said: “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.”
The chance to invest in Jafurah attracted strong interest from investors worldwide, according to Aramco. Co-investors alongside GIP include several leading institutional investors from Asia and the Middle East.
The GIP mid-market infrastructure equity team, which focuses on long-term, contracted assets, has a record of successful investments in the region. This latest move builds on earlier collaborations between Aramco and BlackRock. In 2022, BlackRock co-led a group of investors in a minority stake in Aramco Gas Pipelines Company.
With phase one of Jafurah expected to begin production later this year, Aramco says subsequent phases are on track, ensuring the field will become a major contributor to Saudi Arabia’s gas supply and its plans to expand into new energy-intensive industries.
