BlackRock in talks to raise around $10B for Aramco deal: Report

BlackRock is in talks with lenders to secure up to $10.3 billion in financing for Aramco's Jafurah infrastructure deal

A group of investors led by BlackRock's Global Infrastructure Partners is in talks with lenders to secure up to $10.3 billion in financing for Aramco's Jafurah infrastructure deal, Reuters reported, citing sources with direct knowledge of the matter.

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.

The debt financing will be split into two parts, a short-term and a long-term loan. 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, the sources said.

Chinese banks have shown interest in helping to finance the short tenor, the source added. Goldman Sachs, Citi, Mizuho and MUFG have also signaled interest in participating in the financing.

The GIP consortium is injecting about $1.8 billion of their own funds into the transaction.

According to Argaam data, Saudi Aramco signed in August an $11 billion lease-and-leaseback transaction related to gas processing facilities at Jafurah with a consortium of international investors led by funds managed by Global Infrastructure Partners, a subsidiary of BlackRock.

Under the agreement, Jafurah Gas Transmission and Processing Company (GMGC) will lease the development and usage rights of the Jafurah gas plant and the Riyadh natural gas liquids fractionation facility, and subsequently lease them back to Saudi Aramco for a 20-year term. Saudi Aramco will hold a 51% majority stake in GMGC, while investors led by GIP will own the remaining 49%.

Jafurah field is the Kingdom’s largest unconventional gas development project, with estimated resources of around 229 trillion standard cubic feet of raw gas and 75 billion barrels of condensates. The project is a cornerstone of Saudi Aramco’s plans to expand its gas production capacity by 60% between 2021 and 2030 in order to meet growing demand, according to the statement.