As per the terms of the agreement, ADNOC will be paid about $4bn by funds managed by KKR and BlackRock, which will hold a combined stake of 40% in ADNOC Oil Pipelines that will lease ADNOC’s stakes in 18 pipelines.
The remaining 60% stake in the new entity will be held by the state-owned oil company through its subsidiary ADNOC Infrastructure, which also holds ADNOC’s 100% interest in Abu Dhabi Crude Oil Pipeline (ADCOP).
The new pipeline entity will transport stabilized crude oil and condensate across the offshore and onshore upstream concessions of ADNOC for a period of 23 years. ADNOC will retain sovereignty over the pipelines and will be also be responsible for the management of pipeline operations.
The 18 pipelines to be leased by ADNOC Oil Pipelines have a total length of more than 750km. The combined capacity of the pipelines is nearly 13,000 Mbblpd.
The new pipeline company will get a tariff payable by ADNOC for its share of volume of crude and condensate transported through the pipelines, which will be supported by minimum volume commitments.
ADNOC Group CEO Sultan Al Jaber said: “The level and sophistication of the investors that we are attracting as financial partners to invest, alongside ADNOC, in these select pipeline assets 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.”
Depending on meeting of customary closing conditions and receipt of regulatory approvals, the transaction is likely to be closed in the third quarter of this year.
KKR co-founder, co-chairman and co-CEO Henry Kravis said: “We have created an innovative core midstream infrastructure platform alongside ADNOC and BlackRock that can be a catalyst for further foreign investment and broader economic transformation in the United Arab Emirates.
“Having long had a presence in the region, we appreciate the high quality of ADNOC as a partner and Abu Dhabi’s investor-friendly environment to enable our first direct investment in the region.”
In the downstream sector of its business, ADNOC signed deals with Eni and OMV in January to sell stakes of 20% and 15%, respectively in ADNOC Refining for a total sum of $5.8bn.
