China’s biggest state banks are lending billions to Aramco’s Jafurah gas project, though its funds have passed on the opportunity to invest in the venture, three people familiar with the matter said.
Chinese banks provided more than a third of the financing for what will potentially be the biggest shale gas project outside of the US, with Bank of China (3988), ICBC (1398) and China Construction Bank (0939) each lending about US$1 billion (HK$7.8 billion) and Agricultural Bank of China (1288) around US$750 million, two people familiar with the matter said.
Aramco in August signed an US$11 billion lease-and-leaseback agreement for the processing facilities with a consortium led by Global Infrastructure Partners, part of US BlackRock, the world's biggest investor.
Chinese funds, some of which were given the chance to take part in the equity funding round for Jafurah, didn't participate, according to two people who cited US-China trade tensions.
Chinese fund absence contrasts with Aramco’s 2022 deal, when China’s Silk Road Fund and China Merchants Capital joined BlackRock and Keppel in a pipeline venture and shows how deteriorating US–China trade relations are shaping deal-making in the Gulf.
Aramco's Jafurah project is central to Saudi Arabia's ambitions to become a major global player in natural gas and to boost its gas production capacity by 60 percent by 2030 from 2021 levels.
Under the terms of the deal, Jafurah Midstream Gas Company will lease processing assets to Aramco for 20 years, with Aramco retaining 51 percent and the GIP-led group holding 49 percent.
BlackRock’s GIP has anchored the Jafurah equity group, joined by investors including Abu Dhabi sovereign wealth fund Mubadala and Abu Dhabi investment firm Lunate, according to four sources familiar with the deal.
Aramco, BlackRock, Mubadala and Lunate declined to comment. The US and Chinese governments did not respond to a request for comment. Bank of China, ICBC, China Construction Bank and Agricultural Bank of China also did not respond to a request for comment.
Beijing has reportedly instructed state funds to steer clear of US private-capital firms and even non-US managers with American exposure, the Financial Times reported in April.
China, the biggest buyer of Saudi oil, helped broker Riyadh’s 2023 rapprochement with Iran after years of hostility that had fuelled conflicts across the region. Beijing's role in the breakthrough shook up dynamics in the Middle East, where the United States was for decades the main dealmaker.
Reuters
