Simpson Thacher is advising Global Infrastructure Partners (“GIP”), a part of BlackRock, as lead investor in a global consortium in respect of the financing relating to the purchase of an equity stake in Jafurah Midstream Gas Company (“JMGC”) for $11 billion as part of a lease and leaseback deal relating to the Jafurah gas processing facilities owned by the Saudi Arabian Oil Company (“Aramco”).
Jafurah is the largest non-associated gas development in the Kingdom of Saudi Arabia, estimated to contain 229 trillion standard cubic feet of raw gas and 75 billion Stock Tank Barrels of condensate. It is a key component in Aramco’s plans to increase gas production capacity by 60% between 2021 and 2030, to meet rising demand.
As part of the transaction, a newly-formed subsidiary, JMGC, will lease development and usage rights for the Jafurah Field Gas Plant and the Riyas NGL Fractionation Facility, and lease them back to Aramco for a period of 20 years. JMGC will receive a tariff payable by Aramco in exchange for granting Aramco the exclusive right to receive, process and treat raw gas from Jafurah. Aramco will hold a 51% majority stake in JMGC, with the remaining 49% held by a consortium of international investors led by funds managed by GIP.
The transaction is expected to close as soon as practicable, subject to customary closing conditions.
The Simpson Thacher team includes Paul Hibbert, Mark Nichol and Busra Kakdas (Banking and Credit); Gil Strauss, Surya Bala and Eugenia Repetto (Capital Markets); and Jonathan Lindabury, Nathan Utterback and Jhaton White (Derivatives).