MEOG: Aramco deal and TAQA interest

In this week’s MEOG, Gulf deal making continues to garner attention, with Saudi Aramco completing a $6bn sukuk and Chinese interest in the UAE’s TAQA.

Aramco last week raised $6bn via its first dollar-denominated sukuk in three tranches, attracting orders with a combined value of more than $60bn as it surpassed the reported sukuk target of $5bn. The funds are likely to be used in part to cover a portion of Aramco’s upcoming quarterly $18.75bn payment. Meanwhile, it is reported to have appointed Morgan Stanley as the lead adviser on a deal to monetise its gas pipeline infrastructure in much the same way it did with its oil pipeline business earlier this year.

In April, the company successfully closed a $12.4bn deal for a consortium led by EIG Global Partners to acquire a 49% stake in Aramco Oil Pipelines Co. (AOPC) for a duration of 25 years. Under the deal, the Saudi firm will be liable for all maintenance and to make rate payments for crude transferred through the extensive pipeline network.

Elsewhere, state-owned China Southern Power Grid Co. (CSG) is reported to be in discussions with banks as it seeks to acquire a 10% stake in UAE utility Abu Dhabi National Energy Co. (TAQA).

TAQA announced plans in March to reduce reliance on oil and gas for power generation and “become a champion for low carbon power and water”, pledging to invest over $10bn in the UAE to achieve this.

It intends to focus mainly on solar photovoltaic (PV) to increase the share of power produced from renewable sources from the current 5% to more than 30% by 2030, and will improve desalination efficiency by increasing the role of reverse osmosis to 66% by 2030.

Ahead of the announcement of its transition strategy, the company was reported to be considering the sale of its Canadian and UK North Sea assets and admitted as much in the plans, saying it would “focus on commercially viable opportunities to reduce exposure to the hydrocarbon sector”.