Abu Dhabi, UAESaturday 21 September 2019

Adnoc and Singapore's GIC complete $600m pipeline infrastructure deal

The Asian country's sovereign wealth fund will retain 6% in the newly formed entity Adnoc Oil Pipelines

Adnoc closed its pipeline infrastructure investment with GIC marking the completion of the multi-billion dollar oil pipeline infrastructure deal.  Courtesy of Adnoc
Adnoc closed its pipeline infrastructure investment with GIC marking the completion of the multi-billion dollar oil pipeline infrastructure deal.  Courtesy of Adnoc

Abu Dhabi National Oil Company (Adnoc) completed its $600 million (Dh2.2 billion) pipeline infrastructure investment agreement with GIC, Singapore’s sovereign wealth fund, alongside BlackRock, KKR and Abu Dhabi, Retirement Pensions and Benefits Fund (ADRPBF) as co-investors, boosting the total deal value to about Dh18bn.

“The successful final closing of this landmark transaction is a clear vote of confidence by the global investment community in both the UAE and Adnoc as attractive investment destinations," Ahmed Jasim Al Zaabi, group director of finance and investment at Adnoc said in a statement on Wednesday. "The caliber of these leading global and domestic investors underlines the quality and attractiveness of Adnoc’s infrastructure assets and our ability to efficiently structure and close value-creating investment opportunities for our partners and investors.”

Adnoc has expanded its strategic partnership and co-investment model over the past two years and created new investment opportunities across all areas of its value chain, while proactively managing its portfolio of assets and capital.

In July, GIC, which has more than $100bn in assets in 40 countries, said it is investing $600m in the crude pipeline infrastructure. The follow-on investment will give GIC a 6 per cent stake in a newly formed entity, Adnoc Oil Pipelines. BlackRock and KKR together hold a 40 per cent stake, ADRPBF retains 3 per cent and state-controlled oil and gas major Adnoc owns the remaining 51 per cent.

In June, Adnoc completed a $4bn financing deal with BlackRock, the world's largest asset manager, and global private equity firm KKR for its pipeline infrastructure. The deal, financed by a group of international banks through the private equity companies, was oversubscribed during syndication. The ADRPBF contributed $300m to the deal.

In exchange for receiving $4bn upfront from BlackRock and KKR, Adnoc is leasing 18 of its pipelines that total 750 kilometres in length and have 13 million barrels per day capacity over 23 years.

Adnoc retains sovereignty and management of the pipelines, which transport stabilised crude and condensate from its onshore and offshore fields to export and refining facilities.

Adnoc Oil Pipelines will receive a tariff from the state-owned company for how much crude and condensate it transports. As part of the framework, minimum volume commitments have been put in place.

New York-based KKR's investment in Adnoc's pipeline assets is the first direct investment it has made in the Middle East through its $7.4bn Global Infrastructure Investors Fund, although it has previously acquired pipeline assets in North and Central America. BlackRock, which has almost $6 trillion in assets under management, invested through its third Global Energy & Power Infrastructure Fund.

The agreement marks the first time that leading international financial institutions were able to make investments related to Adnoc's midstream assets following a competitive selection process by the company.

The UAE accounts for 4 per cent of the world’s crude production, much of it from fields owned and operated by Adnoc.

Updated: September 5, 2019 06:13 AM

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