Page 7 - DMEA Week 42

DMEA COMMENTARY DMEA

for some time and the firm has been strategic in cashing in on its assets is best demonstrated by
its selection of partners. the ‘lease out and rent back’ premise of deals
In early 2019, it revealed that work was relating to its oil and gas pipeline networks.
underway under a $1.2bn engineering, procure- In February 2019, US private equity giants
ment and construction (EPC) contract awarded BlackRock and KKR acquired a 40% stake for
last year to South Korea’s SK Engineering & Con- $4bn in ADNOC Oil Pipelines. The newly
struction for a 42mn barrel underground crude formed venture was assigned long-term leases
storage facility at Fujairah. The eastern emirate for 18 of ADNOC’s domestic crude oil and con-
has the key advantage of being located outside densate pipelines. The move followed an inter-
the crowded Strait of Hormuz. national bond issuance through the Abu Dhabi
An agreement to store up to 6.29mn barrels at Crude Oil Pipeline Co. (ADCOP) subsidiary, an
the Kiire oil terminal in southern Japan has been IPO in retail unit ADNOC Distribution, and the
in place since 2009. Meanwhile, a memorandum sale of minority stakes in ADNOC Drilling as
of understanding (MoU) was signed in Novem- well as the refining deal.
ber with Indian Strategic Petroleum Reserves Later that year, BlackRock and KKR were
Ltd (ISPRL) to consider taking space in the new joined in the pipeline JV by the Abu Dhabi
Padur cavern in the southern state of Karnataka. Retirement Pensions and Benefits Fund
ISPRL completed the process of filling a 5.86mn (ADRPBF) and Singapore’s sovereign wealth
barrel allocation at the nearby Mangalore facility fund GIC, with the latter acquiring a 6% stake
during the same month. for $600mn.
On October 17, the Indian cabinet gave July 2020 was a busy month for ADNOC as
permission for ADNOC to export crude it the company signed a JV agreement with hold-
has sitting in storage held by Indian Strategic ing company ADQ to create a new investment
Petroleum Reserves Ltd. (ISPRL). The reserve platform to fund and oversee the development of
has a current crude storage capacity of 4.55mn industrial projects in the planned Ruwais Deriv-
tonnes (33.4mn barrels) and is full. Meanwhile, atives Park.
the commercial quantity – the volume available ADNOC then agreed a deal to sell a mul-
for marketing by ADNOC – was recently raised ti-billion-dollar stake in its natural gas pipelines
from 35% to 50%. India sees this as an opportu- to an investor group backed by Global Infra-
nity to turn the country into a hub for re-export, structure Partners (GIP) and Brookfield Asset
while ADNOC has around 17mn barrels availa- Management in a deal that valued the pipelines
ble for sale from strategic locations in India. at more than $15bn, including debt. The GIP
Also last week, the company last week consortium also includes Italian infrastructure
acquired two very large crude carriers (VLCCs) operator Snam SpA, Ontario Teachers’ Pension
through its shipping unit ADNOC Logistics and Plan, Singapore sovereign fund GIC and South
Services, marking its entry into the VLCC sector. Korea’s NH Investment & Securities Co. The
The units, Hunter Laga and Hunter Saga, were consortium acquired a collective 49% stake in
bought from Hunter Group for $84mn each. ADNOC Gas Pipeline Assets (ADNOC Gas
Data from VesselsValue shows that ADNOC Pipelines) for $10.1bn. The gas subsidiary holds
Logistics and Services owns six bulkers, three lease rights to 38 gas pipelines covering a total
containerships, nine tankers, eight LNG carriers of 982 km.
and one LPG carrier. Last week, the Abu Dhabi Pension Fund
(ADPF) and ADQ agreed to invest $2.1bn
Control into select ADNOC gas pipeline infrastructure
The moves further emphasise ADNOC’s efforts assets. The deal will see ADNOC divesting 20%
to control the entire hydrocarbon value chain in ADNOC Gas Pipelines HoldCo, the wholly
for its production, and by monetising assets and owned subsidiary that holds 100% of its interest
infrastructure, it has raised billions of dollars, in ADNOC Gas Pipelines, to ADPF and ADQ.
inspiring fellow NOCs in the region to follow its This leaves ADNOC with a stake of 40.8% in
lead. ADNOC Gas Pipelines having raised $12.2bn
The company’s innovative approach to for the 59.2% it has either sold or leased. ™

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