In the biggest global energy deal of the year yet, Abu Dhabi National Oil Company (ADNOC) entered into an agreement for $20.7 billion with a group of six foreign investors today.
Brookfield Asset Management, NH Investment & Securities, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board, Global Infrastructure Partners and Snam are the six major infrastructure and institutional investors who are involved in the deal.
As per the agreement, the consortium will infuse $10.1 billion to purchase a 49% stake in ADNOC Gas Pipeline Assets, which is a newly formed subsidiary. The 49% stake has the leasing rights to 38 pipelines for a time period of 20 years. The pipeline network is 982.3 kilometers long, carrying the gas from ADNOC to local consumers in the UAE.
ADNOC will hold the majority stake of 51% and consequently control operations and remain responsible for capital expenditure. The agreement forms part of the UAE national oil company’s strategy to draw foreign capital and maximize the value of its assets.
“The multibillion-dollar transaction allows ADNOC to tap new pools of global institutional investment capital while retaining full operational control over the assets. Further, the consortium benefits from investing in low-risk profile quality energy infrastructure and steady cash flow generation”, the company said in its statement.
“We are excited to have completed this deal, and once again partner with some of the world’s leading infrastructure and institutional investors. It is in fact a huge achievement, particularly given the current challenging economic climate and business environment, and it is, if anything, a testament to Abu Dhabi and the UAE’s position as a trusted, reliable and credible investment destination.”
“Importantly, by completing this landmark transaction, we are sending a very strong signal to other potential partners from around the world, that ADNOC continues to be open and in fact, very ready for business,” Mr al-Jaber added.
The announcement is the second inflow of money into Abu Dhabi ‘s energy assets after $5 billion brought in last year from investors including BlackRock and KKR for leasing rights to its oil pipelines signifying continued investor interest in ADNOC’s income-generating and low-risk assets.
Global Infrastructure Partners chairman and managing partner Adebayo Ogunlesi said “Adnoc’s gas network is a core piece of midstream infrastructure in the UAE and this transaction presents a unique opportunity to invest in an asset of this quality and importance, while also supporting Adnoc in their smart growth strategy.”
The other members of the consortium also expressed their pleasure in associating with ADNOC.