Page 6 - DMEA Week 25

DMEA COMMENTARY DMEA

UAE secures $10.1bn

pipeline investment

UAE UAE national oil company (NOC) ADNOC has
reached an agreement to transfer a 49% stake
The UAE is not the in its gas pipeline business to a band of inter-
other Middle Eastern national investors for $10.1bn. It is the largest
country looking to use energy-sector deal to take place in 2020, a year
its infrastructure to which has seen investment tank as a result of the
draw in investment. coronavirus (COVID-19) pandemic.
“Today’s landmark investment signals con-
tinued strong interest in ADNOC’s low-risk,
income-generating assets, and sets another
benchmark for large-scale energy infrastruc-
ture investments in the UAE and the wider
region,” the NOC’s CEO, Sultan Al Jaber, said in
a statement.
The investors in question are US’ Global
Infrastructure Partners and Brookfield Asset
Management, Singapore’s sovereign wealth fund downstream businesses, and it needs investment
GIC, Canada’s Ontario Teachers’ Pension Plan to do so.
Board, South Korea’s NH Investment & Secu- The company also span off its oil pipeline
rities and Italian pipeline operator Snam. They network last year, passing a 40% stake to US
will invest in ADNOC’s newly formed subsidiary investors Blackrock and KKR for $4bn. GIC
ADNOC Gas Pipeline Assets, which will lease and the Abu Dhabi Retirement Pensions and
rights to 38 pipelines stretching a total of 982.8 Benefits Fund then took stakes of 6% and 3%
km that deliver gas from the company’s fields to respectively. Blackrock was reportedly intend-
its customers in the UAE. ing to take part in the gas pipeline deal but
ADNOC will lease out its ownership interest pulled out.
in the assets to ADNOC Gas Pipeline Assets for Downstream, ADNOC also sold 20% and
20 years in exchange for a volume-based tariff 15% stakes in its refining division to Italy’s Eni
subject to a floor and a cap, the company said. and Austria’s OMV respectively, raising $5.8bn.
“This innovative transaction structure allows That deal covered the 837,000 barrel per day
ADNOC to tap new pools of global institutional Ruwais refining complex, an ageing 85,000 bpd
investment capital, whilst at the same time main- plant and a 1,900-km pipeline network.
taining full operating control over the assets, Snam’s involvement in the deal will provide
including as part of the investment,” ADNOC expertise in pipeline management. Besides run-
said. ning Italy’s pipeline system, the company also
The transaction valued ADNOC’s pipeline manages networks in Austria, Greece and France
business at $20.7bn, making the 49% stake worth and is also a partner in the Trans-Adriatic Pipe-
$10.1bn. The investors will pay this sum upfront line (TAP) that is expected to start pumping gas
when the deal is closed after regulatory approval to Southeast Europe later this year. This marks
is secured, which Snam said was anticipated in the firm’s first investment beyond Europe.
July. “We will work with ADNOC and the consor-
The deal is being financed through an $8bn tium partners by leveraging our industrial skills,
bridge loan obtained from a banking syndicate know-how and innovative solutions in natural
consisting of 17 banks, sources told Reuters. gas infrastructure management, and provide our
These banks include Abu Dhabi Commercial contribution to the UAE’s energy system,” Snam
Bank, BNP Paribas, Credit Agricole, Emirates CEO Marco Alvera commented.
NBD, First Abu Dhabi Bank, HSBC, MUFG, The UAE is not the only Middle Eastern coun-
Societe Generale and Standard Chartered. try looking to use its infrastructure to attract new
capital. In Saudi Arabia, Saudi Aramco is consid-
Divestment drive ering the sale of its oil pipeline unit, with the aim
Like many producers, ADNOC is scrambling to of raising $10bn. Pipelines are also going up for
raise cash following a steep fall in revenues since sale in other regions, with Portuguese oil com-
the COVID-19 crisis began. But the company’s pany Galp reported to be considering the divest-
strategy is also to expand its midstream and ment of its gas distribution assets. ™

P6 www. NEWSBASE .com Week 25 25•June•2020