Abu Dhabi’s ADNOC announces $20.7bn energy infrastructure deal

Abu Dhabi National Oil Company (ADNOC) has partnered with a consortium of investors namely Global Infrastructure Partners (GIP), Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board (Ontario Teachers’), NH Investment & Securities and Snam, who will invest in select ADNOC gas pipeline assets valued at $20.7bn.

The consortium will collectively acquire a 49 per cent stake in ADNOC Gas Pipeline Assets (ADNOC Gas Pipelines), a newly formed subsidiary of ADNOC with lease rights to 38 pipelines covering a total of 982.3 kilometers. ADNOC holds 51 per cent majority stake.

ADNOC will lease its ownership interest in the assets to ADNOC Gas Pipelines for 20 years in return for a volume-based tariff subject to a floor and a cap. The transaction will result in upfront proceeds of over $10bn to ADNOC and is subject to customary closing conditions and regulatory approvals.

Ownership of the pipelines, management of pipeline operations, and responsibility for associated operational and capital expenditures will remain with ADNOC.

The transaction structure will enable ADNOC to secure global institutional investment capital, whilst maintaining operating control over the assets included as part of the investment.

Dr. Sultan Al Jaber, UAE Minister of State and ADNOC group CEO, said: “This milestone transaction demonstrates the trust and confidence placed in ADNOC by the global investment community and unlocks significant value from our pipeline portfolio, following last year’s groundbreaking oil pipeline infrastructure investment partnership. Today’s landmark investment signals continued strong interest in ADNOC’s low-risk, income-generating assets, and sets another benchmark for large-scale energy infrastructure investments in the UAE and the wider region.”

Adebayo Ogunlesi, chairman and managing partner of GIP commented: “ADNOC’s gas network is a core piece of midstream infrastructure in the UAE and this transaction presents a unique opportunity to invest in an asset of this quality and importance, while also supporting ADNOC in their smart growth strategy. This transaction underscores GIP’s strategy of investing in high quality infrastructure assets and developing long term strategic partnerships with industry leaders.”

“We are pleased to invest in this strategic pipeline system, which serves as the critical link between UAE low-cost natural gas supply and robust in-country demand,” said Bruce Flatt, CEO, Brookfield Asset Management. “This transaction aligns with our strategy of investing in high quality, essential assets generating stable and predictable cash flows in a sector we know well. ADNOC has established itself as one of the world’s leading natural gas producers, with an exemplary operational record. We look forward to partnering with them in support of this critical asset and sector.”

“This strategic transaction is attractive to Ontario Teachers’ as it provides us with a stake in a high-quality infrastructure asset with stable long-term cash flows, which will help us deliver on our pension promise,” noted Ziad Hindo, chief investment officer, Ontario Teachers’. “This new partnership with ADNOC and a group of world-class institutional and infrastructure investors expands our global presence and provides further geographic diversification to our portfolio.”

This agreement is the largest transaction since ADNOC announced the expansion of its partnership and investment model in 2017.