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South Korean broker joins bid for

ADNOC’s gas pipelines

UAE NH Investment & Securities, the brokerage arm place yet, and terms are still subject to change.
of South Korea’s NongHyup Financial Group, ADNOC has started in recent years to expand
In the short term, the has joined a consortium that aims to take a $8bn its midstream and downstream businesses by
UAE wants to raise stake in the gas pipelines of the UAE’s ADNOC, forging partnerships with foreign firms to attract
cash to shore up its South Korean media has reported. the necessary investment. In the short term it
position following the While details are tentative, the acquisition is also wants to raise cash to shore up its position
collapse in oil prices. expected to involve ADNOC setting up a new following the collapse in oil prices.
entity to receive tariff payments for pipeline Progress on the partial sale of ADNOC’s gas
flows. This was the model used last year when pipeline network has been slow, as the coronavi-
ADNOC spun off its oil pipeline system. A 40% rus (COVID-19) pandemic and its broader eco-
stake in the newly formed ADNOC Oil Pipe- nomic impact have sapped investor enthusiasm.
lines was sold to US investors Blackrock and ADNOC hired Bank of America Merrill
KKR for $4bn. Singapore’s GIC and the Abu Lynch and Japan’s Mizuho to arrange a sale. In
Dhabi Retirement Pensions and Benefits Fund March, several investors including Australian
(ADRPBF) subsequently took shares of 6% and fund manager IFM dropped out of a potential
3% respectively. deal. NH Investment’s group is in talks with up
The consortium NH Investment is reportedly to 20 banks for a $8bn loan to fund the purchase,
joining includes the US’ Brookfield Asset Man- sources told Reuters in April.
agement, Italian infrastructure operator Snam, As part of the stake sale of its oil pipelines,
Canada’s Ontario Teachers’ Pension Plan and ADNOC provided KKR and Blackrock two
GIC, the Korea Herald and others reported in decades of guaranteed returns. The national oil
late May. company (NOC) will likely offer similar terms
A final agreement on the purchase is not in in the gas system sale. ™

NNPC seeks to cut production costs

NIGERIA MELE Kyari, the group managing director of Even so, he said, NNPC is taking steps to
Nigerian National Petroleum Corp. (NNPC), bring production costs down. The company has
Mele Kyari, the group has identified reduced production costs as one already racked up some successes by working to
managing director of his company’s priorities. “negotiate with its partners to cut down on con-
of Nigerian National Kyari told journalists during an online con- tracts’ life cycle, selecting the right projects [and]
Petroleum Corp. ference last week that high production costs were engaging the right institutions to bring down the
(NNPC), has identified a handicap for state-owned NNPC. They have cost,” he stated.
reduced production become an even bigger source of concern now Kyari continued: “Our ultimate target we
costs as one of his that the coronavirus (COVID-19) pandemic has have set for ourselves is to bring the cost down
company’s priorities. caused world oil prices to fall sharply, he said. to at most $10 per barrel. This will come at a cost
The company cannot sustain a situation in and huge challenges ... But I can assure you [that]
which the cost of production can go as high as at any cost, we will take steps to bring this cost
$35.97 per barrel while crude commands a price down so that our country will benefit and the oil
of $13 per barrel, as it did recently, he added. As industry will become a profitable business for the
such, it hopes to bring the figure down to $10 per 200mn Nigerians.”
barrel on average by 2021, he said.
“Oil prices have gone down to [less than] NNPC expects to run into some obstacles,
$10 per barrel, due to the economic impacts of he said, because there are certain businesses and
COVID-19, resulting in crude oil supply and institutions in the country that benefit directly
demand imbalances,” he commented. “[The] from high production costs. He did not name
cost of production has always been a major issue any culprits but said that his company was
for NNPC. Without cost reduction, there will be determined to make sure that expenses were not
no tax revenues, and therefore the investments inflated. “With such people, the meaning is that
would not be worth the while, with unmet we are paying about three times more than what
expectations.” we should,” he remarked. ™

P12 www. NEWSBASE .com Week 22 04•June•2020