BlackRock Inc. is considering a sale of its stake in the leasing rights to Saudi Aramco’s natural-gas pipeline network back to the energy giant, according to people familiar with the matter.
The asset manager is in talks with Aramco about a potential deal, the people said, declining to be identified as the information is confidential. The US firm will weigh other options for the asset if the discussions fail to lead to an agreement, some of the people said.
No final decisions have been made and there’s no certainty the deliberations will lead to a transaction. Representatives for BlackRock and Aramco declined to comment.
BlackRock’s stake in the assets, which it acquired in 2021, is likely to be worth billions of dollars. A consortium led by the firm had invested $15.5 billion to buy 49% of the entity that holds leasing rights over the pipelines — a deal hailed by Aramco as a demonstration of its ability to draw global investors.
In a similarly-structured transaction that year, Aramco also sold a $12.4 billion stake related to its oil pipelines. The twin deals are among its largest-ever divestments, and came as the kingdom ramped up efforts to sell assets and fund new industries from artificial intelligence to electric vehicles.
A decision to now buy back at least a portion of the gas pipeline business would indicate Aramco sees value in increasing its stake in a business that’s vital to the kingdom’s energy infrastructure.
It mirrors a move by Abu Dhabi, where asset manager Lunate bought back BlackRock and KKR & Co.’s 40% stake in Abu Dhabi National Oil Co.’s oil pipeline network last year. In January, the firm also agreed to buy Snam SpA’s minority stake in Adnoc’s gas pipeline unit.
For Aramco, any deal will come at a time when its debt levels are near a three-year high. It’s targeting more borrowing to finance growth and better leverage its balance sheet, Chief Executive Officer Amin Nasser said in May. Meanwhile, the firm’s also taken a hit from a slump in oil prices, due in part to a push by some of the biggest OPEC+ producers to unwind supply cuts at a faster-than-scheduled pace.
BlackRock has close ties to the Middle East and the firm has ramped up its presence in Saudi Arabia over the years. It was the first major global investment manager to open an office in Riyadh, and has invested across the Gulf in Kuwait, Qatar and the United Arab Emirates.
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