The China Investment Corporation (CIC) and the Silk Road Fund are among a range of investors looking to buy a US$10 billion stake in Saudi Aramco’s oil pipelines.
The Chinese funds are up against Apollo Global Management, Global Infrastructure Partners (GIP), Brookfield, Blackrock and Saudi and Emirati pension funds, which have also made non-binding offers, according to Bloomberg. Some bidders could forge consortia in the process of making binding offers.
Aramco is disposing of assets to pay for US$75 billion in annual dividends, mostly to the Saudi government. The company is under financial pressure due to the impact of the pandemic on the oil market.
CIC’s pipeline investments to date have focused on the UK’s gas pipeline infrastructure via the Quadgas consortium, which acquired full control of gas supplier Cadent from the National Grid in 2019 having acquired a 61 per cent stake in 2016. The Chinese sovereign wealth fund is likely to seek partnerships with GIP and Brookfield in the Aramco pipeline infrastructure acquisition.
Some state-owned investors have not been deterred from snapping up pipeline assets, despite lower oil prices and the drive to decarbonize their portfolios to meet Paris Agreement objectives on climate change. Last year, Singapore’s sovereign wealth fund GIC and the Ontario Teachers’ Pension Plan (OTPP) joined GIP, Brookfield, South Korea's NH Investment & Securities and Italy’s Snam in the US$20.7 billion acquisition of a 49 per cent stake in the UAE’s Adnoc Gas Pipeline Assets. In 2019, the Alberta Investment Management Corporation (AIMCo) acquired an 85 per cent stake in the 90km Northern Courier Pipeline in Canada for an estimated US$856 million.