By Hadeel Al Sayegh
DUBAI (Reuters) -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 U.S., with Bank of China, ICBC and China Construction Bank each lending about $1 billion and Agricultural Bank of China around $750 million, two people familiar with the matter said.
Aramco in August signed an $11 billion lease-and-leaseback agreement for the processing facilities with a consortium led by Global Infrastructure Partners, part of U.S. 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 U.S.-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 U.S.–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% 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% and the GIP-led group holding 49%.
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 U.S. 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 U.S. private-capital firms and even non-U.S. managers with American exposure, the Financial Times reported in April.
Hong Kong-based CK Hutchison’s $22.8 billion plan to sell 43 ports, including two at the Panama Canal, to a BlackRock-MSC consortium earlier this year drew sharp criticism from Beijing.
Now, under Chinese pressure, Hutchison is in talks to add shipping giant COSCO to the deal, even as U.S. President Donald Trump has called for curbing China’s involvement in the canal, sources and analysts told Reuters in July.
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.
(Reporting by Hadeel Al Sayegh; additional reporting by Beijing newsroom and Davide Barbuscia in New York; Editing by Elisa Martinuzzi and Elaine Hardcastle.)
