The world’s biggest private equity groups are investing in infrastructure assets of the national oil companies of the Middle East as Saudi Arabia and the United Arab Emirates (UAE) opened their pipeline networks to foreign capital.
Private equity giants are now seeking a slice of the infrastructure assets of the international majors in deals that would give Big Oil funds to reinvest in oil and gas production. These days, amid lower oil prices and continued reluctance of public-market investors despite the dramatic shift in the ESG narrative, private equity money could be an opportunity for the top Western majors to raise cash by selling parts of their pipeline and storage assets.
The infrastructure deals in the oil and gas sector began from the Middle East, but these could spread to the international majors, which need capital to sustain dividends and buybacks at $60 oil and have enough to invest in boosting oil and gas production.
Investors Eye Big Oil’s Infrastructure Assets
Investors have recently urged top executives from ExxonMobil, BP, TotalEnergies, and Eni to consider selling stakes in pipeline and storage assets to private equity groups in what would be a new way for Big Oil to monetize their infrastructure assets and one that doesn’t involve equity-market investors.
Ahead of ADIPEC, one of the energy industry’s top gatherings, private equity teams sat down at a closed-door meeting with Exxon, BP, TotalEnergies, and Eni and told their executives that they could offload more of their infrastructure assets, the Financial Times reports.
“You guys need to rethink how you think about capital,” one participant at the meeting told the majors, the FT says.
Right now, private equity giants are more inclined to invest in Big Oil than the equity markets that are “not as receptive” to the oil and gas industry, the participant told FT.
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“Take the cheap capital and reinvest it in your core business,” the person added, referring to Big Oil’s opportunities to attract funds from the infrastructure arms of the biggest investment firms.
Some deals have been made this year.
For example, Apollo-managed funds in March signed a deal with BP to invest about $1 billion to purchase a 25% non-controlling stake in BP Pipelines (TANAP) Ltd, the BP subsidiary that holds BP’s 12% interest in TANAP, owner and operator of the pipeline that carries natural gas from Azerbaijan across Turkey.
While the deal enables BP to monetise its interest in TANAP, BP will remain the controlling shareholder of BP TANAP and retain a long-term commercial and strategic interest, including governance rights, in the pipeline – a vital part of the gas value chain for the BP-operated Shah Deniz gas field in Azerbaijan.
Prior to that, Apollo and BP signed an agreement for Apollo to buy a non-controlling stake in BP Pipelines TAP Limited, which holds a 20% share in Trans Adriatic Pipeline AG (TAP) in a transaction valued at about $1 billion.
“BP and Apollo continue to explore opportunities for further cooperation, including in infrastructure, gas and low carbon energy assets,” the UK-based supermajor said in March 2025, just as it had unveiled its strategic reset to shift focus back to oil and gas.
This summer, Shell completed the sale of its 16.125% interest in the company owning the Colonial Pipeline in the U.S. to Colossus AcquireCo LLC, a wholly owned subsidiary of Brookfield Infrastructure Partners L.P. and its institutional partners.
Other supermajors have yet to announce major deals in the trend that the Middle East’s national oil companies kicked off.
Investors Flock to Middle East Energy Infrastructure
As early as in 2020, Abu Dhabi’s ADNOC struck a $20.7-billion deal with Global Infrastructure Partners (GIP) and Brookfield, among other investors, to sell a 49% stake in ADNOC Gas Pipeline Assets LLC.
This year, global investment firm KKR bought a minority stake in ADNOC Gas Pipeline Assets.
KKR was part of the first-ever energy infrastructure deal for a Middle Eastern NOC when it bought in 2019 a minority stake in ADNOC’s oil pipelines business. The 2019 acquisition of 40% in ADNOC Oil Pipelines by KKR and BlackRock was the first-ever investment of foreign asset managers in infrastructure of a state-owned energy firm in the Gulf.
Last year, KKR and BlackRock sold the 40% stake in ADNOC Oil Pipelines to Abu Dhabi-based alternative investment manager Lunate.
Saudi Arabia is also looking for opportunities to monetize Aramco’s infrastructure with deals with global funds.
Earlier this year, Saudi Aramco signed an $11 billion lease and leaseback deal involving its Jafurah gas processing facilities with a consortium of international investors, led by funds managed by Global Infrastructure Partners (GIP), a part of BlackRock.
Jafurah, the largest non-associated gas development in Saudi Arabia, is a key part of Aramco’s plans to increase gas production capacity by 60% between 2021 and 2030, to meet rising demand.
Infrastructure deals have flourished in the Middle East in recent months.
Last year, Bapco Energies of Bahrain sold to a BlackRock fund a minority ownership stake in the Saudi Bahrain Pipeline Company (SBPC).
Kuwait’s state firm Kuwait Petroleum Corporation (KPC) is looking to raise up to $7 billion from leasing part of its pipeline network in a transaction that would be similar to Aramco’s deal, Bloomberg reported in September.
The trend of global infrastructure funds buying into energy infrastructure started in the Middle East but is already expanding to Big Oil, as evidenced in the recent Shell and BP pipeline deals. Private equity money would be a win-win for the participants in transactions—the international majors will get capital outside of their traditional (and drying) public-markets base, while infrastructure funds will get long-term reliable returns on their investment.
By Tsvetana Paraskova for Oilprice.com
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