BlackRock’s GIP May Secure Over $10 Billion for Jafura Project

A group of investors led by BlackRock’s Global Infrastructure Partners (GIP) is in talks with lenders to secure up to $10.3 billion in financing, which will be split into a short-term and a long-term loan, for Saudi oil and gas major Aramco’s Jafurah infrastructure deal.

Citing two sources with direct knowledge of the matter, a report from Reuters said that banks including JPMorgan and Japan’s Sumitomo Mitsui Banking Corporation are in talks to participate in the transaction, which will allow Aramco to raise cash upfront in return for steady payments over time.

Under the deal, a newly formed subsidiary, Jafurah Midstream Gas Company (JMGC), will lease development and usage rights for gas processing facilities around the Jafurah gas development and lease them back to Aramco for 20 years, the report said.

Aramco, the world’s biggest oil company, will retain a 51% stake in JMGC, with the remaining 49% held by the investor group.

The company could also raise between $3 billion and $4 billion from a sale of Islamic bonds, following a $5 billion bond issuance in May. It drew more than $16.5 billion in orders on Wednesday for the sukuk, expected to price later in the day, the sources told Reuters.

The deal also reflects Saudi Arabia’s broader energy strategy. By displacing crude oil in domestic power generation, more barrels will be available to export, as feedstock for petrochemicals, and to power emerging sectors such as artificial intelligence data centres.

Chinese Banks Too?

The GIP consortium is injecting about $1.8 billion of their own funds into the transaction. Roughly three-quarters of the debt financing will have a seven-year tenor – and could be refinanced via bonds – and the rest will be due in 19 years. Chinese banks have shown interest in helping to finance the short tenor, the source added.

Goldman Sachs, Citi, Mizuho and MUFG have also signalled interest in participating in the financing, However, Citi, MUFG and Goldman Sachs declined to comment, while Mizuho did not immediately respond to a request for comment.

The structure is similar to deals done by Aramco in 2021 and 2022 for its oil and gas pipeline networks.

The Jafurah field, estimated to contain 229 trillion standard cubic feet (TSCF) of raw gas, is the largest non-associated gas development in Saudi Arabia and a cornerstone of Aramco’s plan to boost gas output by 60% by 2030 from 2021 levels.

The infrastructure investment is expected to support the construction of more than 1,500 km of pipelines and processing facilities.

It may be recalled that in August, GIP inked an $11 billion deal to lease the infrastructure serving the Jafurah gas project and then lease it back to Aramco for 20 years. The over $100 billion Jafurah project is being developed to supply fuel to domestic power plants and for export.