Latham & Watkins Advises EIG on US$12.4 Billion Infrastructure Deal with Aramco

Latham & Watkins advised EIG, a leading institutional investor to the global energy sector and one of the world’s leading infrastructure investors, on its acquisition of a 49% equity stake in Aramco Oil Pipelines Company (Aramco Oil Pipelines), a joint venture formed with Saudi Arabian Oil Co. (Aramco) to hold a 25-year lease over Aramco’s stabilized crude oil pipeline network. The pipeline network, which includes all of Aramco’s existing and future stabilized crude pipelines in the Kingdom of Saudi Arabia, connects oilfields to downstream networks.

As part of the transaction, Aramco will lease the usage rights in its pipeline network to Aramco Oil Pipelines, and Aramco Oil Pipelines will grant back to Aramco the exclusive right to use, transport through, operate, and maintain the pipeline network for 25 years. In exchange, the joint venture will receive a quarterly, volume-based tariff, payable by Aramco and backed by minimum volume commitments. Aramco will at all times retain operational control of the pipeline network and will assume all operating and capital expense risk.

The transaction is valued at approximately US$12.4 billion for EIG’s stake, with Aramco holding the remaining 51% stake in the new entity, indicating a total equity value of Aramco Oil Pipelines of approximately US$25.3 billion.

The Latham team was led by London infrastructure partners Conrad Andersen and John Guccione, and included London capital markets partner Dean Naumowicz.

The deal follows similar asset sales by ADNOC in the UAE. Andersen advised a consortium led by Global Infrastructure Partners on the bridge financing (and bond take-out) of the acquisition of the ADNOC gas pipelines last year.