ADNOC Signs $4 Bln Pipeline Infrastructure Investment Deal With BlackRock, KKR

(RTTNews) - The Abu Dhabi National Oil Company or ADNOC said that it has entered into a multi-billion-dollar midstream pipeline infrastructure partnership with U.S. investment firms KKR and BlackRock. The transaction will result in upfront proceeds of approximately $4 billion to ADNOC and is expected to close in third-quarter 2019, subject to customary closing conditions and all regulatory approvals.

As part of the transaction, a newly formed entity called ADNOC Oil Pipelines - Sole Proprietorship LLC - will lease 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 will, in turn, receive a tariff payable by ADNOC, for its share of volume of crude and condensate that flows through the pipelines, backed by minimum volume commitments. Funds managed by BlackRock and KKR will form a consortium to collectively hold a 40% interest in the entity, while ADNOC will hold the remaining 60% majority stake. Sovereignty over the pipelines and management of pipeline operations remain with ADNOC.

As per the deal, ADNOC is laying the groundwork for additional infrastructure-related investment opportunities with institutional investors. ADNOC's 60% equity stake in ADNOC Oil Pipelines will be held through ADNOC Infrastructure LLC, a 100% ADNOC-owned subsidiary, which also holds ADNOC's 100% stake in Abu Dhabi Crude Oil Pipeline (ADCOP). In time, ADNOC Infrastructure LLC is expected to add further select ADNOC infrastructure assets and become the key vehicle for a new and innovative ADNOC infrastructure investment platform.

The collection of 18 pipelines being leased by ADNOC Oil Pipelines has a total length of over 750km, and a total aggregate capacity of approximately 13,000 Mbblpd (gross). These assets represent key midstream infrastructure for Abu Dhabi's energy ecosystem, allowing for the vast majority of Abu Dhabi's crude oil production to be transported from ADNOC's onshore and offshore upstream assets, to Abu Dhabi's key take-away outlets and terminals for conversion to other high-value products, or on to global energy markets.

The pipelines have underlying long-term minimum volume commitments and are supported by stable crude oil production from ADNOC Onshore and ADNOC Offshore - the leading onshore and offshore operating companies in ADNOC with global IOCs as JV partners, each with an average remaining concession life of over 35 years.