Abu Dhabi’s ADNOC seeks local investors for its pipeline network

By Rahul Vaimal, Associate Editor
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According to sources, Abu Dhabi is considering getting local investors into its $21 billion natural gas pipeline network, just months after raising cash from foreign funds.

State-owned Abu Dhabi National Oil Co. (ADNOC) is reportedly considering shifting its 51% stake in the pipelines into a special purpose company.

It will then sell around 20% of the fund to one or more local funds, giving them an indirect stake in the underlying assets.

The business plans to make the deal at the same rate as its transaction in June, when it sold a stake in the pipelines to foreign investors, valuing the asset at approximately $21 billion including debt. ADNOC will maintain operational control over the pipeline network after the sale.

Abu Dhabi, the capital of the United Arab Emirates, has been opening up its energy market as it aims to create additional funding sources. The pipeline deals will bring cash in at a time when the emirate is dealing with the fall in oil prices this year and the coronavirus pandemic.

The June deal saw ADNOC sell a 49% stake in its gas pipelines worth $10.1 billion to a group of six investors including Global Infrastructure Partners, Brookfield Asset Management Inc., and the sovereign wealth fund of Singapore, GIC Pte.

The 38 pipelines span nearly 1,000 kilometers (621 miles).

ADNOC had started reforming some businesses over the last four years, selling stakes in a retail unit, and adding new foreign partners.

“Since embarking on our co-investment and partnership strategy, ADNOC continues to attract world-class partners and leading institutional investors. The recent gas pipeline infrastructure transaction offered an attractive and stable investment proposition that continues to garner significant interest from the business and investment community,” said the company.

ADNOC has also attracted International investors towards its refining and oil-field servicing arms. Last year KKR & Co. and BlackRock Inc. agreed to invest $4 billion in the oil pipelines of ADNOC.