Dubai: The Abu Dhabi National Oil Company (ADNOC) announced that it has entered into a landmark $4 billion 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.
The latest deal underlines the attractiveness of Abu Dhabi and the UAE as a rapidly emerging investment destination for international capital, according to Adnoc, which recently earned the highest credit score in the oil and gas sector by Fitch Ratings.
“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,” it said.
As part of the transaction, a newly formed entity called Adnoc Oil Pipelines – Sole Proprietorship LLC 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 the third quarter of 2019.
Commenting on the transaction, Al Jaber said the “level and sophistication of the investors” that they are attracting as financial partners to invest” is “a clear reflection of the UAE’s stable, attractive and reliable investment environment.”
“It also demonstrates the global investment community’s validation of Adnoc’s progressive and smart approach to unlocking value from its portfolio of assets while retaining control over their ownership and operation.”