ADNOC seals $4 billion pipeline deal with KKR, BlackRock

ADNOC (Abu Dhabi National Oil Company) has signed a $4 billion midstream pipeline infrastructure deal with U.S. institutional investors KKR and BlackRock, the government-owned Abu Dhabi company announced on Sunday.

The newly formed entity called ADNOC Oil Pipelines will lease the oil company’s interest in 18 pipelines of more than 750 km in total length and an aggregate capacity of about 13 million b/d. The pipelines will be transporting crude oil and condensates for a 23-year period across Adnoc’s offshore and onshore concessions.

BlackRock is investing through its Global Energy and Power Infrastructure Fund series, while KKR’s investment is through its third Global Infrastructure Investors Fund.

Funds managed by KKR and BlackRock will form a consortium owning 40 percent stake in ADNOC pipelines. ADNOC will retain industry minimum of 60 percent stake in the entity along with pipeline sovereignty and pipeline management.

The deal, which is expected to close in the third quarter of 2019, will result in upfront proceeds of approximately $4 billion to ADNOC.

The statement cited Sultan al Jaber, ADNOC group CEO,  saying “This transaction is another example of the innovative steps we are taking to constantly optimize our assets and capital and deliver sustained value to both ADNOC and the UAE. We are creating a range of attractive opportunities for global and regional institutional investors to partner and invest alongside ADNOC to enhance value from our sizeable infrastructure base, drawing on our expertise in structuring and packaging value-enhancing partnership programs that preserve Abu Dhabi’s ownership and control of its assets. Most importantly, this transaction marks a milestone for ADNOC and Abu Dhabi as it paves the way for further significant foreign direct investment into the UAE.”

“We have created an innovative core midstream infrastructure platform alongside ADNOC and BlackRock that can be a catalyst for further foreign investment and broader economic transformation in the United Arab Emirates. Having long had a presence in the region, we appreciate the high quality of ADNOC as a partner and Abu Dhabi’s investor-friendly environment to enable our first direct investment in the region. With this transaction as a precedent, we believe there is substantial potential to do even more,” Co-Founder, Co-Chairman and Co-CEO of KKR Henry Kravis said.