Aramco is splitting off its gas business into a separate division as it explores a minority float

Aramco is splitting off a standalone gas unit: The state oil giant is reorganizing to create a standalone gas division — a structure that could eventually support a minority listing to raise fresh capital, Reuters reports, citing two people familiar with the plans.

The restructuring: Aramco would carve gas out of its upstream and downstream businesses, giving the new unit its own president. That would create a dedicated platform to develop domestic gas, expand overseas LNG, and explore capital-raising options such as further lease-and-leaseback agreements.

Why it matters: A standalone gas division would give Aramco a ring-fenced asset it can open to outside investors without exposing its core upstream oil business. Gulf state oil companies have increasingly used this model to bring in capital while retaining control of their core operations. UAE’s Adnoc, for example, has listed minority stakes in its gas, drilling, and retail-fuel businesses. Both Adnoc and Aramco have also raised bns through transactions involving their oil and gas pipeline assets.

REMEMBER- Aramco has already used that playbook on Jafurah. A BlackRock GIP-led consortium invested USD 11 bn in Jafurah’s gas-processing infrastructure last year through a lease-and-leaseback agreement. The assets were placed in Jafurah Midstream Gas Company, with Aramco retaining 51% and the investor group taking 49%, before being leased back to Aramco for 20 years. Jafurah began operating last year and is potentially the largest unconventional gas field outside the US, holding an estimated 230 tcf.