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Pipeline Infrastructure Investment Deal between ADNOC, ADRPBF

Pipeline Infrastructure Investment Deal between ADNOC, ADRPBF

Monday, 15 April, 2019 - 06:30
Sultan Al Jaber and Riyad Al Mubarak during the signing of the agreement. Asharq Al-Awsat
Abu Dhabi - Asharq Al-Awsat
The Abu Dhabi National Oil Company, ADNOC, announced on Sunday that it has entered into a follow-on pipeline infrastructure investment agreement with the Abu Dhabi Retirement Pensions and Benefits Fund, ADRPBF.

ADRPBF will invest AED1.1 billion (US$300 million), following BlackRock and KKR which in February of this year signed the initial investment agreement to invest AED14.7 billion (US$4 billion) into the midstream pipeline assets.

The follow-on investment agreement will see ADRPBF acquire a 3 percent stake in a newly formed entity, ADNOC Oil Pipelines – Sole Proprietorship LLC (‘ADNOC Oil Pipelines’), with BlackRock and KKR together holding 40 percent and ADNOC the remaining 57 percent. ADNOC Oil Pipelines leases ADNOC’s interest in 18 pipelines, transporting stabilized crude oil and condensate across ADNOC’s offshore and onshore upstream concessions, for a 23-year period.

The entity receives a tariff payable by ADNOC, for its share of volume of crude and condensate that flows through the pipelines, backed by minimum volume commitments. Sovereignty over the pipelines and management of pipeline operations remain with ADNOC.

The innovative leasing investment structure with the three investors marks the first time that leading, global and domestic institutional investors have deployed long term equity capital into key midstream infrastructure assets of a national oil company in the UAE. Securing an additional high-caliber investment partner such as ADRPBF further highlights the attractiveness and long term value creation potential of these unique energy assets to the global institutional investment community. In addition to meeting ADRPBF’s infrastructure investment policies and long term return targets, the transaction marks another important milestone in the Fund’s strategy to deploy capital in attractive infrastructure assets. It also underlines ADNOC’s role as a primary catalyst in attracting investment into the UAE.

Sunday’s signing ceremony was held at ADNOC Headquarters with Dr. Sultan bin Ahmad Sultan Al Jaber, Minister of State and ADNOC Group CEO, and Riyad Al Mubarak, ADRPBF Chairman.

Commenting on the transaction, Al Jaber said: "This follow-on investment will generate solid, long term value and returns to Abu Dhabi Retirement Pensions and Benefits Fund stakeholders. The addition of the Abu Dhabi Pensions Fund adds further validation of our wise leadership’s guidance to create and enhance value across our business by forming long term, mutually beneficial strategic partnerships. In addition, it demonstrates ADNOC’s progressive and smart approach to unlocking value from its portfolio of assets while retaining control over their ownership and operation."

As for Al Mubarak he said that "The Abu Dhabi Pensions Fund is pleased to invest in ADNOC’s landmark transaction which is aimed at optimizing ADNOC’s assets and capital, and delivering sustained value to both ADNOC and the UAE. This transaction is an extension of our keen effort to create a solid base of investments in the UAE through partnerships with major local companies such as ADNOC."

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