Aramco Hires Morgan Stanley for Gas Pipeline Stake Sale

Saudi Aramco has hired Morgan Stanley as the lead adviser to review a potential multibillion-dollar stake sale in its natural gas pipeline network, people familiar with the matter said.

The state-owned energy producer is making early preparations for the sale, according to the people, who asked not to to be identified because the information is private. The company hasn’t yet started a formal process and could add more banks to work on the deal, they said.

The deal may be structured similarly to Aramco’s $12.4 billion oil pipeline deal, the people said. In that transaction, investors will own a minority stake in a new subsidiary that has leasing rights over the network, while Aramco will retain ownership of the oil pipelines and will continue to hold a majority stake in the subsidiary.

The percentage of the stake up for sale is under discussion, the people said. Deliberations are at an early stage and there’s no certainty the company will proceed with a transaction. Aramco and Morgan Stanley declined to comment.

Bloomberg reported in April that Aramco was considering selling part of its gas pipeline network in a deal that could raise billions of dollars depending on how the transaction is structured. The same month, Aramco said a consortium led by EIG Global Energy Partners LLC would invest in its oil pipelines.

Aramco is offloading stakes in non-core assets to help maintain its $75 billion dividend, most of which goes to the Saudi government. The company is also planning to spend about $35 billion on capital expenditure this year.

Aramco’s Master Gas System is a network of pipelines connecting its production with processing sites throughout the kingdom. The infrastructure has a capacity of about 9.6 billion cubic feet per day, according to Aramco’s annual report.

©2021 Bloomberg L.P.

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