ADNOC (UAE) Signs a $ 4 Billion Pipeline Infrastructure Contract with KKR and BlackRock

ABU DHABI: The national oil company Abu Dhabi (ADNOC) has signed a $ 4 billion interim pipeline infrastructure contract with US investment firms KKR and BlackRock, the government company said on Sunday.

ADNOC has expanded its business through strategic partnerships since 2017. Last month, it won a combined US $ 5.8 billion investment from the Italian company Eni and the Austrian company OMV, as part of its refining, with a view to creating a new commercial operation held by the three partners.

The latest transaction follows the early days of ADNOC in the financial markets with its loan for the crude oil pipeline in Abu Dhabi, the IPO of ADNOC Distribution and other initiatives.

A new entity, ADNOC Oil Pipelines, will lease the oil company's stake in 18 pipelines, transporting crude oil and condensates on ADNOC's upstream concessions for a period of 23 years, said ADNOC in a statement.

The 18 pipelines have a total length of more than 750 km and a capacity of 13 million barrels per day.

The funds managed by KKR and BlackRock will form a consortium that will hold 40% of the entity's capital, with the remainder going to ADNOC. ADNOC will have sovereignty over pipelines and the management of their operations.

The agreement, which is expected to be finalized in the third quarter of 2019, will bring about USD 4 billion to ADNOC.

According to the statement, Sultan al-Jaber, CEO of the ADNOC Group, said that this agreement confirmed ADNOC's approach of "unlocking the value of its portfolio of assets while retaining control of their property and their exploitation ".

BlackRock is investing in its Global Energy & Power Infrastructure Fund, while KKR is investing in its third Global Infrastructure Investors Fund, the statement said.

"We believe that the agreement reached today between ADNOC, BlackRock and KKR will be followed by many other such partnerships aimed at investing in the future growth of the region," said BlackRock CEO Laurence Fink.

This is KKR's first direct investment in the region, said co-CEO Henry Kravis, adding that there was considerable potential for more.

The ADNOC has undergone profound changes since the appointment of Al-Jaber in 2016, embarking on privatization, oil trading and expanded partnerships with strategic investors.

"I think that the approach adopted here by ADNOC reflects a desire to monetize the assets under their control," said Edward Bell, director of commodity research at Emirates NBD.

"So, I think this reflects an attempt to realize the value of the infrastructure in place that they have in place more than a strategic shift in oil and gas along the way."

ADNOC produces about 3 million barrels of oil and 10.5 billion cubic feet of raw gas per day.

(Report by Stanley Carvalho, edited by Raissa Kasolowsky and David Goodman)