#Saudi Arabia #Aramco #Dhahran #Jafurah #Global Infrastructure Partners

Aramco Secures $11 Billion Deal for Jafurah Midstream

Aramco, a global leader in integrated energy and chemicals, has made waves in the sector with its recent signing of an $11 billion lease and leaseback agreement. This deal, which involves the company's Jafurah gas processing facilities, is in collaboration with a consortium of international investors spearheaded by Global Infrastructure Partners (GIP), part of the global investment giant BlackRock.

Understanding the Jafurah Project

The Jafurah gas field is significant, as it is recognized as the largest non-associated gas development in Saudi Arabia. This site is estimated to hold an incredible 229 trillion standard cubic feet of raw gas and 75 billion Stock Tank Barrels of condensate. The project plays an essential part in Aramco's broader gas production expansion strategy aimed at increasing production capacity by 60% between 2021 and 2030. This effort is in direct response to the surging demand for gas within the Kingdom.

Details of the Agreement

Through this transaction, a newly formed subsidiary, the Jafurah Midstream Gas Company (JMGC), will lease the development and operational rights for the Jafurah Field Gas Plant and the Riyas NGL Fractionation Facility to Aramco. This dominant energy company will then lease the facilities back for a whopping 20 years.

As part of this agreement, JMGC will receive a tariff from Aramco, allowing the latter exclusive rights to receive, process, and treat gas from the Jafurah field. Interestingly, Aramco retains a 51% stake in JMGC, while GIP and its consortium hold the remaining 49%.

Impact on Aramco and Saudi Arabia's Economy

The agreement is set to close soon, pending usual closing conditions, and it highlights a strong opportunity for Aramco to optimize its asset utilization. This development signals a substantial investment from foreign players into Saudi Arabia, reflecting the international community's confidence in Aramco's long-term strategies.

Amin H. Nasser, the President and CEO of Aramco, emphasizes that the Jafurah project is central to their ambitious gas expansion program. He indicates that the entry of GIP-led consortium as investors underscores the inherent value of the project while reinforcing Aramco's long-standing commitment to meeting growing energy demands in sectors like AI data centers.

GIP's Perspective and Global Interest

Bayo Ogunlesi, Chairman and CEO of GIP, expressed excitement about deepening their partnership with Aramco to improve Saudi Arabia's natural gas infrastructure. For GIP, investment in Jafurah helps address the increasing global demands for cleaner fuels and energy security. Notably, this investment also reflects GIP's strong history of engagement in the Middle East's infrastructure landscape.

The Jafurah project attracted extensive interest from global investors, particularly as its potential unfolds to enhance both Aramco's asset optimization and the overall energy landscape of the Kingdom.

The Bigger Picture

As Aramco gears up for the phase one production of Jafurah, they aim to introduce subsequent phases that will further position the site as a fundamental contributor within Saudi Arabia's energy sector. This project is also expected to supply energy essential for powering emerging growth sectors within the Kingdom.

With the global energy transition gaining momentum, the successful realization of such large-scale projects showcases not only the potential of natural gas development but also reinforces the Kingdom’s ongoing commitment to diversifying its energy sources and enhancing sustainability in its operations.

In conclusion, Aramco's $11 billion deal for the Jafurah midstream is more than a transaction; it represents a pivotal move in the evolution of the global energy market and lays the foundation for significant advances in Saudi Arabia's energy future.