The Abu Dhabi National Oil Company, ADNOC, has announced its entrance into agreement with some leading infrastructure investors and operators, sovereign wealth and pension funds.
A consortium of investors comprising Global Infrastructure Partners, GIP; Brookfield Asset Management, Singapore’s sovereign wealth fund GIC; Ontario Teachers’ Pension Plan Board, Ontario Teachers; NH Investment & Securities and Snam, the Consortium; will invest in select ADNOC gas pipeline assets valued at $20.7 billion.
In one of the largest global energy infrastructure transactions, the Consortium will collectively acquire a 49 percent stake in ADNOC Gas Pipeline Assets LLC (henceforth referred to as “ADNOC Gas Pipelines”), a newly formed subsidiary of ADNOC with lease rights to 38 pipelines covering a total of 982.3 kilometres, with ADNOC holding the 51 percent majority stake, the company announced on Tuesday.
The transaction structure allows ADNOC to tap new pools of global institutional investment capital, whilst maintaining full operating control over the assets included as part of the investment.
Under the terms of the agreement, ADNOC will lease its ownership interest in the assets to ADNOC Gas Pipelines for 20 years in return for a volume-based tariff subject to a floor and a cap. The transaction will result in upfront proceeds of over $10 billion to ADNOC and is subject to customary closing conditions and regulatory approvals.
The gas pipeline network connects ADNOC’s upstream assets to local UAE off-takers. Ownership of the pipelines, management of pipeline operations, and all responsibility for associated operational and capital expenditures will remain with ADNOC.
For ADNOC’s partners, this transaction represents a unique opportunity to invest in quality energy infrastructure assets with a low-risk profile that generate stable cash flows.
Commenting on the transaction, Dr. Sultan bin Ahmad Sultan Al Jaber, Minister of State and ADNOC Group CEO, said, “We are pleased to once again partner with some of the world’s leading global infrastructure and institutional investors in what marks the region’s largest energy infrastructure investment. This milestone transaction demonstrates the trust and confidence placed in ADNOC by the global investment community and unlocks significant value from our pipeline portfolio, following last year’s groundbreaking oil pipeline infrastructure investment partnership.”
This agreement is the largest transaction since ADNOC announced the expansion of its partnership and investment model in 2017, which aims to unlock value for ADNOC.
The strategic joint venture will see ADNOC pay ADNOC Gas Pipelines a volume-based tariff for the use of pipelines that transport sales gas and natural gas liquids, NGL, from ADNOC’s upstream assets to Abu Dhabi’s key outlets and terminals.
Bank of America Securities, First Abu Dhabi Bank and Mizuho Securities acted as financial advisors to ADNOC while Moelis & Company acted as an independent financial advisor to ADNOC.
The UAE holds the world’s sixth-largest natural gas reserves. ADNOC’s gas strategy aims to meet in-country gas demand and support the UAE in achieving gas self-sufficiency.
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