Muscat: The Abu Dhabi National Oil Company (Adnoc) announced that it has entered into a landmark multi-billion-dollar midstream pipeline infrastructure partnership with KKR and BlackRock, two of the world’s leading institutional investors.
To mark the occasion, a signing ceremony was held on Sunday at Adnoc Headquarters with 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.
As part of the transaction, a newly formed entity called Adnoc Oil Pipelines – Sole Proprietorship (henceforth referred to as “Adnoc Oil Pipelines”) – will lease Adnoc’s interest in 18 pipelines, transporting stabilised crude oil and condensate across Adnoc’s offshore and onshore upstream concessions, for a 23-year period.
The entity 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 per cent interest in the entity, while Adnoc will hold the remaining 60 per cent majority stake. Sovereignty over the pipelines and management of pipeline operations remain with Adnoc. The transaction will result in upfront proceeds of approximately $4 billion to Adnoc and is expected to close in third quarter 2019, subject to customary closing conditions and all regulatory approvals.
BlackRock and KKR’s long-term investment underlines the attractiveness of Abu Dhabi and the UAE as a rapidly emerging investment destination for international capital. This transaction 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.
In conjunction with this transaction, Adnoc is laying the groundwork for additional infrastructure-related investment opportunities with institutional investors. Adnoc’s 60 per cent equity stake in Adnoc Oil Pipelines will be held through Adnoc Infrastructure, a 100 per cent Adnoc-owned subsidiary, which also holds Adnoc’s 100 per cent stake in Abu Dhabi Crude Oil Pipeline (Adcop). In time, Adnoc Infrastructure is expected to add further select Adnoc infrastructure assets and become the key vehicle for a new and innovative Adnoc infrastructure investment platform.