Why ‘Peak Oil’ Won’t Mean the End of Drilling - Bloomberg
A multibillion-dollar project to tap virgin oil fields in east Africa is expected to get the green light this weekend, highlighting an uncomfortable truth about the energy industry.
Even as Total SE, the supermajor behind the new project straddling Uganda and Tanzania, makes genuine efforts to begin the transition to low-carbon energy, the industry is nowhere close to ending its appetite for oil.
If you accept that petroleum demand may have already peaked -- and that’s still a controversial opinion -- the world is expected to burn hundreds of billions of barrels of oil in the coming decades.
That gives plenty of incentive for giants like Total or Royal Dutch Shell Plc, plus the hundreds of smaller explorers that remain in business, to keep searching the world’s frontiers for the next place to sink their drill bits.
Aramco Selling $12.4 Billion Stake in Pipeline Rights Unit - Bloomberg
Investors led by EIG Global Energy Partners LLC agreed to acquire a roughly $12.4 billion stake in a Saudi Aramco oil-pipeline rights company.
The group will acquire a 49% equity stake in Aramco Oil Pipelines Co., a newly formed entity with rights to 25 years of rate payments for oil shipped through the Saudi oil giant’s network of conduits, EIG said in a statement. The deal implies a total equity value of about $25 billion for Aramco Oil Pipelines.
The deal is part of Saudi Arabia’s drive to open up to foreign investment and use the money to diversify its economy. Asset disposals also go some way to helping the energy giant maintain payouts to shareholders, as well as investments in oil fields and refinery projects. The company paid a $75 billion dividend last year, the highest of any listed company, almost all of which went to the state.
Aramco has become the world’s third-largest company by market value, trailing only Apple Inc. and Microsoft Corp., after an initial public offering in 2019 in which the oil giant raised $25.6 billion for less than 2% of its shares.
“This landmark transaction defines the way forward for our portfolio optimization program,” Aramco Chief Executive Officer Amin Nasser said in the statement. “Aramco’s strong capital structure will be further enhanced with this deal, which in turn will help maximize returns for our shareholders.”
The deal was described as a lease-and-lease-back agreement. The state-controlled company will lease the usage rights in its pipelines to Aramco Oil Pipelines. The new entity will grant back to Aramco the exclusive right to operate and maintain the network for 25 years and collect rates from the parent company in return. Aramco will continue to retain ownership of the pipelines.
“This transaction aligns perfectly with EIG’s philosophy of investing in high-quality assets with contracted cash flows in critical infrastructure,” Robert Blair Thomas, Chief Executive Officer of EIG, said in the statement. The Washington-based firm owns about $22 billion in energy-related assets globally.
