The war is not over yet, Saudi Aramco accelerates "monetization"! Plans to sell $35 billion worth of infrastructure and real estate equity

Saudi Aramco is advancing the largest privatization plan in its 93-year history, aiming to liquidate up to $35 billion by selling infrastructure, real estate, and other non-core assets to strengthen its balance sheet and attract foreign investment.

According to media reports citing insiders, the related transactions are already underway, covering sale-leaseback deals of properties such as the headquarters campus, equity sales in oil export and storage terminals, as well as transactions relating to gas-fired power plants and water infrastructure businesses.

Sources noted that despite ongoing conflict in the Middle East, these assets are still seen as attractive and are expected to draw significant interest from Wall Street institutions.

This round of asset sales has accelerated against the backdrop of regional conflict, making the timing particularly sensitive. Since the outbreak of conflict on February 28 this year, exports from the Gulf region have been impacted, and the global M&A market has generally become more cautious. Nonetheless, Saudi Aramco's privatization process has not slowed. Analysts point out that the strategic rationale behind these moves has shifted—from optimizing non-core asset allocation to maximizing liquidity under wartime pressure.

BlackRock Deal Opens the Floodgates

The immediate trigger for this large-scale asset sale was an $11 billion gas facilities lease agreement signed between a consortium led by BlackRock-owned Global Infrastructure Partners and Saudi Aramco. According to Bloomberg, after the deal was signed, funds from around the world flooded Aramco with calls, seeking to participate in opportunities. This strong signal of demand further solidified the management's determination to advance larger-scale asset monetization.

With its headquarters located in Dhahran, Eastern Province, Saudi Aramco executives immediately began planning this most ambitious privatization scheme in company history. Sources said that the company intends to retain full control of upstream assets while staying open to the sale of minority stakes in midstream and downstream assets.

Export Blockades and Fiscal Pressure

The ongoing war has directly impacted Saudi Aramco’s export operations. Throughput in the Strait of Hormuz has dropped sharply, forcing the company to reroute most shipments through the east-west pipeline to Yanbu Port. According to Bloomberg ship tracking data, this adjustment has allowed Saudi Arabia to recover about 60% of pre-war export volumes, but overall export levels remain significantly suppressed.

Against this backdrop, Aramco’s asset sale plan takes on heightened fiscal significance. Hasnain Malik, Head of Equity Research for Emerging Markets and Geopolitics at Tellimer, stated: "Before large project spending cuts and the impact of the Iran conflict on export volumes, this might have been read as Aramco trimming non-core assets; now, it will be viewed as a move by Aramco and its sovereign shareholders to maximize liquidity."

FDI Far Below Target

Another key driver for asset sales is Saudi Arabia’s urgent need to attract foreign investment. Saudi Arabia has set a target to attract $100 billion in foreign direct investment (FDI) annually by the end of the decade, but current actual inflows remain far below this level.

Rachel Ziemba, Senior Fellow at the Center for a New American Security, noted that "FDI will continue to face challenges," which means the "Saudi government needs cash more than ever.” One of the ways to get it is through Aramco’s huge dividends, as well as taxes and royalties on oil income. Ziemba, who also founded Ziemba Insights, characterized Aramco’s plan as "a combination of optimizing the balance sheet and a trend to deploy capital to energy and other priority infrastructure."

Converting Physical Assets into Financial Assets

This privatization is not an isolated event but rather a continuation of Saudi Aramco’s long-standing strategy of monetizing assets. Well before the 2019 IPO, the company began streamlining its asset structure and building debt positions, and has since sold equity in its oil and gas pipeline network, listed a subsidiary on the Riyadh Stock Exchange, and is currently moving to sell a stake in a domestic refinery to a Chinese partner.

Salah Shamma, Head of MENA Equities at Franklin Templeton, pointed out that what investors are most concerned about is not the individual transactions themselves, but "the cumulative overall impact over time: how much future cash flow is being monetized today, and what this means for Aramco’s long-term free cash flow situation."

For Wall Street, as overall M&A activity is dampened by regional conflict, Aramco’s string of deals offers a rare pipeline of quality transactions. For Saudi Arabia, these efforts are both a pragmatic move to relieve fiscal pressure during wartime and a signal to the world that the country can still attract international capital in a turbulent environment.