BlackRock and Aramco finalize $11 billion natural gas infrastructure deal

BlackRock has signed an $11 billion deal to lease and lease back natural gas processing facilities in Saudi Arabia as part of Aramco’s plans to attract foreign capital to the kingdom.

Saudi Aramco signed a 20-year agreement on Thursday to lease facilities that process natural gas in the Jafurah basin to an investment group led by Global Infrastructure Partners. BlackRock acquired this group last year.

Under the agreement, the consortium will lease the facilities back to Aramco. A new Aramco subsidiary, known as Jafurah Midstream Gas Company, will hold the assets, with the state oil company owning 51% of this division. GIP and its co-investors will own the remaining 49%.

The deal is the latest sign of momentum in Saudi Arabia’s efforts to attract capital from abroad to support its economic objectives.

Saudi Arabia recorded $6.4 billion in foreign direct investment inflows in the first quarter of this year, according to official data. This figure represents a 24% increase compared to the same period last year.

However, the kingdom, which seeks to diversify its economy away from dependence on oil revenues, is struggling to attract foreign investment outside the energy sector.

Last year, foreign direct investment into the country fell by 19% year-on-year to $20.7 billion, reaching its lowest level since 2020.

Aramco CEO Amin Nasser said, “This foreign direct investment into the kingdom also highlights the attractiveness of Aramco’s long-term strategy for the international investment community.”

Nasser announced in August that the company plans to begin production in the Jafurah basin later this year. The project is expected to meet Saudi Arabia’s energy needs and allow the kingdom to sell crude oil abroad that would otherwise be burned for domestic power generation.

According to Aramco, the Jafurah basin holds one of Saudi Arabia’s largest natural gas reserves and is estimated to contain approximately 229 trillion standard cubic feet of raw gas.

A person familiar with the matter said the $11 billion investment will be phased in over time and will be funded by GIP’s mid-market investment funds, led by Mark Florian.

This is the latest deal between BlackRock and Saudi Arabia. In late 2021, the US company led a consortium that signed a $15.5 billion lease and lease-back agreement involving Aramco’s gas pipeline network. Nasser joined BlackRock’s board of directors in July 2023.