Page 7 - MEOG Week 22

MEOG PIPeLInes & transPort MEOG
South Korean broker joins bid for ADNOC gas pipelines
Uae
Nh Investment & Securities, the brokerage arm of South Korea’s Nonghyup Financial Group, has joined a consortium that aims to take a $8bn stake in the gas pipelines of the UAE’s ADNOC, South Korean media has reported.
While details are tentative, the acquisition is expected to involve ADNOC setting up a new entity to receive tariff payments for pipeline flows. This was the model used last year when ADNOC spun off its oil pipeline system. A 40% stake in the newly formed ADNOC Oil Pipelines was sold to US investors Blackrock and KKR for $4bn.
Singapore’s GIC and the Abu Dhabi Retire- ment Pensions and Benefits Fund (ADRPBF) subsequently took shares of 6% and 3% respectively.
The consortium Nh Investment is reportedly joining includes the US’ Brookfield Asset Man- agement, Italian infrastructure operator Snam, Canada’s Ontario Teachers’ Pension Plan and GIC, the Korea herald and others reported in late May.
A final agreement on the purchase is not in place yet, and terms are still subject to change.
ADNOC has started in recent years to expand its midstream and downstream businesses by forging partnerships with foreign firms to attract the necessary investment. In the short term it also wants to raise cash to shore up its position following the collapse in oil prices.
Progress on the partial sale of ADNOC’s gas pipeline network has been slow, as the coronavi- rus (COVID-19) pandemic and its broader eco- nomic impact have sapped investor enthusiasm.
ADNOC hired Bank of America Merrill Lynch and Japan’s Mizuho to arrange a sale. In March, several investors including Australian fund manager IFM dropped out of a potential deal. Nh Investment’s group is in talks with up to 20 banks for a $8bn loan to fund the purchase, sources told Reuters in April.
As part of the stake sale of its oil pipelines, ADNOC provided KKR and Blackrock two dec- ades of guaranteed returns. The NOC will likely offer similar terms in the gas system sale.™
Lebanese Army clamps down on fuel smuggling to Syria
Lebanon
ThE Lebanese Army has located and removed a pipeline used for smuggling fuel across the coun- try’s northern border into Syria, it reported in a statement last week.
Fuel smuggling has become rife at the Leb- anese-Syrian border, as both countries contend with economic crises. A reported on Lebanese television on May 9 estimated that up to $400mn of subsidised fuel was being trafficked across the border to Syria each year. Syria, meanwhile, is contending with serious fuel shortages as a result of sanctions restricting oil imports and falling domestic crude production.
Around 30 metres of pipes had been confis- cated on the Lebanese side of the border,” the Army said.
“This step comes as part of the continuous efforts by the Army to combat smuggling at the Lebanese-Syrian border and to [control the bor- der] using all available methods,” it said.
No further details on the operation were pro- vided. Earlier in May trucks laden with illegal
fuel bound for Syria were stopped by the Army at the border.
The Army’s announcement comes after Prime Minister hassan Diab’s government sought to take credit last month for clamping down on border smuggling. But opposition politicians claim that security forces are mostly turning a blind eye to the problem, with only a handful of arrests having been made for smug- gling activities.
Lebanon’s fuel imports doubled last year, despite the country’s economic malaise, with smuggling seen as the primary cause. The coun- try subsidises fuel, wheat and medicine imports, with the Beirut-based UMAM research group estimating that this fuel can be sold at three to four times the price in Syria.
Syria’s oil ministry has taken recent steps to scale back fuel subsidies. While this is seen as a prudent measure given the country’s dwindling finances, it is likely to exacerbate the problem of fuel smuggling.™
Week 22 03•May•2020 w w w . N E W S B A S E . c o m P7