Clifford Chance Advises on Historic Billion Jafurah Midstream Deal in Saudi Arabia
In a significant development for the energy sector, Clifford Chance has been appointed to advise lenders involved in a consortium led by Global Infrastructure Partners (GIP) concerning a monumental lease and leaseback transaction worth billion pertaining to Aramco’s Jafurah gas processing facilities. This strategic deal marks a pivotal moment in the evolution of the Saudi Arabian oil and gas landscape, providing vital insights into the region’s burgeoning infrastructure financing market.
The Jafurah field stands as the largest non-associated gas development endeavor in Saudi Arabia, boasting estimated reserves of an astonishing 229 trillion standard cubic feet of raw gas and approximately 75 billion Stock Tank Barrels of condensate. The scale of the Jafurah project underscores Saudi Arabia’s ongoing commitment to diversifying its energy sources and enhancing its gas production capabilities to meet both domestic demand and export potential.
Under the terms of this landmark agreement, a newly established subsidiary of Aramco, named the Jafurah Midstream Gas Company (JMGC), will lease development and operational rights to the Jafurah Gas Plant and the Riyas NGL Fractionation Facility. These facilities will subsequently be leased back to Aramco for a duration of 20 years. In exchange, JMGC will receive a tariff from Aramco, which grants the latter exclusive rights to receive, process, and treat the raw gas extracted from the Jafurah field. This innovative financial arrangement not only assures consistent revenue flow for the consortium but also enables Aramco to leverage its extensive expertise in gas processing while optimizing its operational costs.
Notably, Aramco will maintain a controlling interest in JMGC, retaining a 51% stake, while the remaining 49% will be distributed among various investors represented by the GIP-led consortium. This allocation of equity reflects a growing trend of public-private partnerships in the Middle Eastern energy sector, which is increasingly becoming a focal point for global investment.
A diverse and accomplished team from Clifford Chance, operating across key financial hubs including Abu Dhabi, Dubai, Luxembourg, Riyadh, and London, collaborated to provide expert guidance to the lenders engaged in this ambitious project. The effort was spearheaded by UAE-based Partner Chirag Sanghrajka, whose profound insights into the complexities of infrastructure financing in the region have been pivotal in navigating this intricate deal.
Sanghrajka’s team comprised seasoned professionals with extensive experience in high-value infrastructure transactions. Among them were Anne Drakeford, Bruce Kahl, Andrew Whelan, Yasser Al-Hussain, Ahmed Choudhry, Dan Royle, Steve Jacoby, Adnes Muhovic, and a robust group of associates and trainees from both the London and Luxembourg offices.
In expressing his thoughts on the transaction, Sanghrajka remarked, “This deal demonstrates the continued appetite of global investors for strategic transactions in the region and highlights the innovative structuring and collaborative approach necessary to achieve such a significant outcome. We are delighted to support our clients in realizing this successful agreement, and we extend our congratulations to all parties involved.”
This significant transaction is not merely a reflection of a single deal in the energy sector; it also signifies a broader trend in the global economy where infrastructure investments are becoming increasingly vital. As nations continue to grapple with the dual challenges of meeting energy demands and ensuring sustainability, projects like the Jafurah gas processing facilities will play a critical role in shaping future energy landscapes.
Furthermore, the Jafurah deal reinforces Saudi Arabia’s Vision 2030 initiative, which aims to reduce the country’s reliance on oil revenues by diversifying its economy. Investments in natural gas development, particularly in a field as vast and promising as Jafurah, are essential for achieving that vision and positioning Saudi Arabia as a leader in the global energy transition.
As the world watches Saudi Arabia’s energy sector evolve, it is clear that transactions of this magnitude will have profound implications, not only for the Kingdom but for the broader global energy market. With increasing interest from international investors and an unwavering commitment to innovation and sustainability, the narrative surrounding Saudi Arabia’s energy future is one of profound potential and transformative change.
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