Page 6 - MEOG Week 23

MEOG Commentary MEOG

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 close to selling a multi-billion-dollar stake in its
already sold shares in its distribution unit and natural gas pipelines to an investor group backed
brought in international investors to its refining by Global Infrastructure Partners (GIP) and
What: and oilfield services business. Brookfield Asset Management, in what is set to
A consortium has bid for 2019 was a busy year for ADNOC as it made be one of the year’s biggest infrastructure deals.
a 49% stake in ADNOC’s eye-catching divestment moves in the down- It was earlier reported that Us investment
natural gas pipeline stream to Italy’s Eni and Austria-based, Abu firm BlackRock had pulled out of this approach.
network. Dhabi state-affiliated OMV, which signed share the buyers could sign an agreement with
purchase agreements to acquire interests of 20% Abu Dhabi National Oil Co. for a 49% stake in
Why: and 15% respectively in ADNOC Refineries for the pipelines this month. A deal could value the
ADNOC is pursuing a a combined total of around $5.8bn. pipelines at more than $15bn, including debt.
policy of economic That deal covers the 837,000 barrel per day Equity financing of $8bn is said to have been
diversification. Ruwais refining complex in the Western Region arranged to help finance the purchase and the
and an ageing 85,000 bpd facility near Abu bidders are said to be negotiating the terms of a
What next: Dhabi City, as well as a 1,900-km pipeline net- debt package with banks. While discussions are
The consortium is work. The trio also agreed to establish a physical advanced and ongoing, the timing and valuation
awaiting the outcome of and derivatives trading JV incorporated at Abu could still change.
the funding discussions. 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 in agement arm of UK utility owner Pennon Group
ADNOC Oil Pipelines. for GBP4.2bn ($5.2bn).
The newly formed venture was assigned long- It could also top plans by Portugal’s biggest oil
term leases for 18 of ADNOC’s domestic crude company, Galp Energia, to sell its gas distribu-
oil and condensate pipelines. tion assets for as much as €1.5bn ($1.7bn).
The Emirati oil company also issued an inter- The intention is for ADNOC’s asset base to
national bond through the Abu Dhabi Crude be managed in a more commercially oriented
Oil Pipeline Co. (ADCOP) subsidiary, staged manner, squeezing out value from the business.
an IPO in retail unit ADNOC Distribution, and Private equity investors and asset managers eye
sold minority stakes in its ADNOC Refining and long-term security and see infrastructure deals
ADNOC Drilling arms. as a stable source of revenue.
In July, Blackstone and KKR were joined in KKR agreed to buy Vitol in a GBP4.2bn
the pipeline JV by the Abu Dhabi Retirement deal in March just after the pandemic outbreak
Pensions and Benefits Fund (ADRPBF) and started. Abu Dhabi is not the only Persian Gulf
singapore’s sovereign wealth fund GIC, with the oil producer using its energy assets to draw fresh
latter acquiring a 6% stake for $600mn. capital to the region.
In saudi Arabia, Aramco, the world’s largest
natural gas oil producer, is also weighing the sale of a stake in
ADNOC’s attention has now turned to gas. In its pipeline unit to raise money amid the slump
the next step of this policy ADNOC is said to be in crude prices.™

P6 www. NEWSBASE .com Week 23 10•May•2020