ADNOC unlocks $4bn in value in pipeline infrastructure investment agreement
The Abu Dhabi National Oil Company (ADNOC) has entered into a $4bn midstream pipeline infrastructure partnership with international investors KKR and BlackRock. As part of the transaction, a newly formed entity called ADNOC Oil Pipelines will lease ADNOC’s interest in 18 pipelines, transporting crude oil and condensate across the company’s offshore and onshore upstream concessions, for a 23-year period. The new company will, in turn, receive a tariff payable by ADNOC, for its share of volume of crude and condensate that flows through the pipelines, backed by minimum volume commitments.
Funds managed by BlackRock and KKR will form a consortium to collectively hold a 40% interest in ADNOC Oil Pipelines, while ADNOC will hold the remaining 60% majority stake. The transaction reportedly marks the first time that leading, global institutional investors have deployed capital into key midstream infrastructure assets of a national oil company in the Middle East.
ADNOC is also laying the groundwork for additional infrastructure-related investment opportunities with institutional investors.
The deal represents another step in ADNOC’s commercially focused 2030 smart growth strategy. Over the past three years the company has consolidated its businesses and unified its brand identity; entered the global capital markets for the first time; completed the first ever IPO of an ADNOC business; opened-up its concessions to new strategic partners; competitively tendered new exploration blocks for the first time in Abu Dhabi’s history; launched the UAE’s unconventional developments; embarked on an ambitious gas strategy aimed first at self-sufficiency and then transitioning to become a potential net exporter of gas; launched a major $45bn expansion to its downstream operations; undertaken a comprehensive digital transformation and taken its first steps to expand internationally.
The signing ceremony was held at ADNOC headquarters with HE Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO; Laurence D Fink, Chairman and CEO of BlackRock; and Henry Kravis, Co-Chairman and Co-CEO of KKR