Page 6 - DMEA Week 23

DMEA COMMENTARY DMEA

ADNOC pipeline sale nears

completion

Following major downstream sell-offs in 2019, ADNOC is now close to sealing
a deal to sell a stake in its domestic gas pipeline network

UAE ABU Dhabi National Oil Co. (ADNOC) has in its natural gas pipelines to an investor group
already sold shares in its distribution unit and backed by Global Infrastructure Partners
WHAT: brought in international investors to its refining (GIP) and Brookfield Asset Management, in
A consortium has bid for and oilfield services business. 2019 was a busy what is set to be one of the year’s biggest infra-
a 49% stake in ADNOC’s year for ADNOC as it made eye-catching divest- structure deals. It was earlier reported that US
natural gas pipeline ment moves in the downstream to Italy’s Eni and investment firm BlackRock had pulled out of
network. Austria-based, Abu Dhabi state-affiliated OMV, this approach.
which signed share purchase agreements to The buyers could sign an agreement with
WHY: acquire interests of 20% and 15% respectively Abu Dhabi National Oil Co. for a 49% stake in
ADNOC is pursuing a in ADNOC Refineries for a combined total of the pipelines this month. A deal could value the
policy of economic around $5.8bn. pipelines at more than $15bn, including debt.
diversification. That deal covers the 837,000 barrel per day Equity financing of $8bn is said to have been
Ruwais refining complex in the Western Region arranged to help finance the purchase and the
WHAT NEXT: and an ageing 85,000 bpd facility near Abu bidders are said to be negotiating the terms of a
The consortium is Dhabi City, as well as a 1,900-km pipeline net- debt package with banks. While discussions are
awaiting the outcome of work. The trio also agreed to establish a physical advanced and ongoing, the timing and valuation
the funding discussions. and derivatives trading JV incorporated at Abu could still change.
Dhabi Global. The GIP consortium also includes Italian
Abu Dhabi has been seeking to speed up infrastructure operator Snam, Ontario Teachers’
its transition from oil revenue to diversify its Pension Plan, Singapore sovereign fund GIC and
economy amid uncertainty about future crude South Korea’s NH Investment & Securities. None
demand; this policy involves privatising assets of the parties wished to comment.
to add new funding streams and attract foreign Infrastructure investors have been defying
capital to ADNOC. the deal-making downturn brought on by the
coronavirus (COVID-19) pandemic to deploy
Pipeline push capital. The ADNOC deal could surpass KKR &
Last February US private equity giants Black- Co.’s agreement in March to buy the waste-man-
stone and KKR acquired a 40% stake for $4bn agement arm of UK utility owner Pennon Group
in ADNOC Oil Pipelines. The newly formed for GBP4.2bn ($5.2bn).
venture was assigned long-term leases for 18 of It could also top plans by Portugal’s biggest oil
ADNOC’s domestic crude oil and condensate company, Galp Energia, to sell its gas distribu-
pipelines. The Emirati oil company also issued tion assets for as much as €1.5bn ($1.7bn).
an international bond through the Abu Dhabi The intention is for ADNOC’s asset base to
Crude Oil Pipeline Co. (ADCOP) subsidiary, be managed in a more commercially oriented
staged an IPO in retail unit ADNOC Distribu- manner, squeezing out value from the business.
tion, and sold minority stakes in its ADNOC Private equity investors and asset managers eye
Refining and ADNOC Drilling arms. long-term security and see infrastructure deals
In July, Blackstone and KKR were joined in as a stable source of revenue.
the pipeline JV by the Abu Dhabi Retirement KKR agreed to buy Vitol in a GBP4.2bn
Pensions and Benefits Fund (ADRPBF) and deal in March just after the pandemic outbreak
Singapore’s sovereign wealth fund GIC, with the started.
latter acquiring a 6% stake for $600mn. Abu Dhabi is not the only Persian Gulf oil
producer using its energy assets to draw fresh
Natural gas capital to the region. In Saudi Arabia, Aramco,
ADNOC’s attention has now turned to gas. In the world’s largest oil producer, is also weigh-
the next step of this policy ADNOC is said to ing the sale of a stake in its pipeline unit to raise
be close to selling a multi-billion-dollar stake money amid the slump in crude prices. ™

P6 www. NEWSBASE .com Week 23 11•June•2020