Abu Dhabi’s IPIC To Use $4bn Pipeline Payment To Repay Debt

Abu Dhabi’s International Petroleum Investment Co (IPIC) expects to receive $4 billion in cash for a crude pipeline it built in the Gulf state, enabling it to repay some upcoming debt maturities, it said in an investor call on Monday.

The state-owned company built a crude oil pipeline from Habshan in the west of the United Arab Emirates to its eastern port of Fujairah to bypass the narrow shipping route in the Gulf which Iran has threatened to block as western sanctions on its oil exports tighten.

IPIC undertook the pipeline project and Abu Dhabi National Oil Co’s (ADNOC) onshore unit ADCO will be the operator. IPIC is in talks with Abu Dhabi’s department of finance and the Supreme Petroleum Council (SPC) on the reimbursement for the spending on the pipeline, senior executives said in the call.

IPIC anticipates to finalise provisional acceptance of the handover of the pipeline to ADNOC by June 30.

The $4 billion reimbursement, which will be repaid in a phased manner over the next 12 months, will be partly used to pay debt maturities arising this year.

IPIC has a 67.5 billion Japanese Yen ($659 million) facility maturing in June and $2 billion UAE-dirhams denominated debt maturing in September.

IPIC also said it has fully-guaranteed a debt of $3 billion raised in April this year by Malaysia’s state-owned firm 1MBD and Abu Dhabi’s Aabar Investments through private placements to invest in various projects.

The energy-focused investment firm, which has stakes in a number of European-based companies, including Spain’s CEPSA and Austrian oil group OMV, is eyeing more acquisitions, senior executives led by Murtadha al-Hashmi, IPIC’s chief financial officer, said on the call.

The focus is mostly on petrochemicals, in addition to upstream oil and gas, oilfield services and technology that would help the emirate’s hydro carbon sector, IPIC said in the call without providing more details.

Earlier this month, IPIC announced it made a 2012 net profit of $1.74 billion on the back of better operating performance at its key units and a recovery in the market value of listed equities.

IPIC’s portfolio comprises more than 15 investments across Europe, North America, the Middle East and Asia and the investment firm had assets of $65.1 billion as at end 2012.

It is also building an oil refinery in Fujairah, one of the seven emirates in the UAE.