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By Rania El Gamal and Ron Bousso
ABU DHABI / LONDON, Oct. 8 (Reuters) – Baker Hughes, the world's second largest oil services group, will take a 5% stake in the Abu Dhabi National Oil Company's drilling unit (ADNOC) for a fee. $ 550 million, under an agreement announced on Monday.
Baker Hughes (BHGE) becomes the first foreign company to take a stake in one of the state-owned ADNOC service companies, under the deal that values ADNOC Drilling at around $ 11 billion.
This will allow Baker Hughes to strengthen its presence in the Middle East, the fastest-growing region for oil and gas operations, and allow ADNOC Drilling to gain access to the know-how and technical expertise of a global player.
Since its acquisition by General Electric Co last year, Baker Hughes has been looking for new business models following the sharp drop in drilling activity worldwide since 2014. This offering includes a range of services aimed at oil and gas producers ranging from exploration to drilling.
"For us, it is not just another partnership … it will enable ADNOC Drilling to be not only a local player, but also a global specialist in the drilling and quarrying industry. oil services, "Reuters told Reuters, Sultan al-Jaber, chief executive officer of ADNOC, Abu Dhabi.
This would help make DNAOC Drilling "the most efficient and the most competitive," said al-Jaber.
Baker Hughes CEO Lorenzo Simonelli said BHGE would have a representative on ADNOC Drilling's board and create a dedicated training team.
The partnership will provide drilling services to the United Arab Emirates and possibly overseas, Al-Jaber said.
The transaction is expected to be finalized by the end of the year, with operations starting in 2019, said ADNOC and BHGE in a joint statement.
Al-Jaber said "there are no plans at this time" to launch a stake in ADNOC Drilling.
Moelis is acting as ADNOC's financial advisor for the transaction, while Citi is BHGE's advisor, both companies said in their statement.
Report by Rania El Gamal, edited by Louise Heavens and
Susan Fenton
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