State-owned companies made a record 15 per cent of all global acquisitions in the oil sector last year.
SWF's dominate energy deals
A record 15 per cent of all global acquisitions in the oil sector in last year were made by Sovereign wealth funds and state-owned companies, with Abu Dhabi entities taking a leading role, according to a report released on Monday. The study, by IHS Herold and Harrison Lovegrave, a subsidiary of Standard Chartered Bank, found however that overall merger and acquisition activity in the energy sector declined by 50 per cent; the total value of deals for 2008 was US$34.2 billion (Dh124bn), down from $64.2bn in 2007. The fall was a direct result of the global economic recession, the report said.
It added that the total value of transactions involving Middle Eastern firms fell to $3.7bn from $13bn in 2007, in part because acquisitions by Abu Dhabi National Energy (TAQA) decreased by $2bn to $6bn. But even as the number of deals declined, the proportion of Government-owned company's activity increased. "Most of the companies in this region are seen as buyers in this industry," said Ed Tockman, an author of the report and the director of oil and gas advisory at Standard Chartered. The largest deal of the year in the Middle East was between two firms now owned by Abu Dhabi Government entities: the $833 million sale of Pearl Energy from Aabar Investments to Mubadala Development Company.