ADNOC enters US$20.7bn energy infrastructure deal

PipelinesThe Abu Dhabi National Oil Company (ADNOC) has entered into an agreement with some of the world’s leading infrastructure investors and operators, sovereign wealth and pension funds

A consortium of investors comprising 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 (the Consortium), will invest in select ADNOC gas pipeline assets worth US$20.7bn.

In one of the largest global energy infrastructure transactions, the consortium will collectively acquire a 49 per cent stake in ADNOC Gas Pipeline Assets LLC (henceforth referred to as “ADNOC Gas Pipelines”), a newly formed ADNOC subsidiary with lease rights to 38 pipelines covering a total of 982.3 km, with ADNOC holding the 51 per cent majority stake.

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

Sultan Al Jaber, UAE Minister of State and ADNOC Group CEO, said, “The 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.”

The strategic joint venture will see ADNOC pay ADNOC Gas Pipelines a volume-based tariff for the use of pipelines that transport sales gas and natural gas liquids (NGL) from ADNOC’s upstream assets to Abu Dhabi’s major outlets and terminals.

The tariff will be charged on the total volumes transported through the pipelines, together with liquefied natural gas (LNG) flows, subject to a volume cap. The new subsidiary will distribute 100 per cent of free cash to the investors in the form of quarterly dividends.

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