ADNOC Closes Landmark Pipeline Infrastructure Investment With KKR and BlackRock
Abu Dhabi, UAE – June 27, 2019: The Abu Dhabi National Oil Company (ADNOC) announced today that it has closed its pioneering pipeline infrastructure investment agreement with BlackRock and KKR. The transaction was originally announced in February of this year when KKR and BlackRock signed an initial investment agreement to invest $4 billion into the midstream pipeline assets. Following this announcement the Abu Dhabi Retirement Pensions and Benefits Fund (ADRPBF) agreed to invest a further $300m. The ADRPBF investment is due to close in the next quarter. The KKR and BlackRock investment, which was successfully funded through their global infrastructure funds and financed by a syndicate of international banks, was oversubscribed during its syndication.
The innovative leasing investment structure 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. This agreement will see BlackRock and KKR acquire a combined 40% stake in a newly formed entity, ADNOC Oil Pipelines – Sole Proprietorship LLC (‘ADNOC Oil Pipelines’), with ADRPBF acquiring 3% and ADNOC holding the remaining 57%. 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.
Ahmed Jasim Al Zaabi, Group Director Finance and Investment at ADNOC said: “The successful closing of this pioneering transaction and the oversubscribed financing is a clear vote of confidence by the global investment and finance community in both the UAE and ADNOC as an attractive investment destination. It also highlights the quality of ADNOC’s midstream pipeline assets and our innovative approach to structuring value-creating investment opportunities for our partners and investors.”
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.
Over the last two years, ADNOC has significantly expanded its strategic partnership and co-investment model and created new investment opportunities across all areas of its value chain, while at the same time, more proactively managing its portfolio of assets and capital. This transaction continues this strategy and follows on from several other recent value creation initiatives including ADNOC’s debut capital markets transaction, the issuance of the Abu Dhabi Crude Oil Pipeline (ADCOP) bond, the IPO of ADNOC Distribution, the recent strategic equity and commercial partnerships between ADNOC Drilling and Baker Hughes as well as ADNOC Refining and Eni and OMV. Fitch Ratings also recently assigned ADNOC a standalone credit rating of AA+ and a Long-Term Issuer Default Rating of AA with a Stable Outlook. Both ratings are the highest currently assigned by Fitch for any oil and gas company, globally.
The innovative leasing investment structure 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. This agreement will see BlackRock and KKR acquire a combined 40% stake in a newly formed entity, ADNOC Oil Pipelines – Sole Proprietorship LLC (‘ADNOC Oil Pipelines’), with ADRPBF acquiring 3% and ADNOC holding the remaining 57%. 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.
Ahmed Jasim Al Zaabi, Group Director Finance and Investment at ADNOC said: “The successful closing of this pioneering transaction and the oversubscribed financing is a clear vote of confidence by the global investment and finance community in both the UAE and ADNOC as an attractive investment destination. It also highlights the quality of ADNOC’s midstream pipeline assets and our innovative approach to structuring value-creating investment opportunities for our partners and investors.”
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.
Over the last two years, ADNOC has significantly expanded its strategic partnership and co-investment model and created new investment opportunities across all areas of its value chain, while at the same time, more proactively managing its portfolio of assets and capital. This transaction continues this strategy and follows on from several other recent value creation initiatives including ADNOC’s debut capital markets transaction, the issuance of the Abu Dhabi Crude Oil Pipeline (ADCOP) bond, the IPO of ADNOC Distribution, the recent strategic equity and commercial partnerships between ADNOC Drilling and Baker Hughes as well as ADNOC Refining and Eni and OMV. Fitch Ratings also recently assigned ADNOC a standalone credit rating of AA+ and a Long-Term Issuer Default Rating of AA with a Stable Outlook. Both ratings are the highest currently assigned by Fitch for any oil and gas company, globally.
About ADNOC
ADNOC is a major diversified group of energy and petrochemical companies that produces about 3 million barrels of oil and 10.5 billion cubic feet of raw gas a day. Its integrated upstream, midstream and downstream activities are carried out by 14 specialist subsidiary and joint venture companies.
To find out more visit: www.adnoc.ae
For further information: media@adnoc.ae
About BlackRock:
BlackRock helps investors build better financial futures. As a fiduciary to investors and a leading provider of financial technology, our clients turn to us for the solutions they need when planning for their most important goals. As of March 31, 2019, the firm managed approximately US $6.52 trillion in assets on behalf of investors worldwide. For additional information on BlackRock, please visit www.blackrock.com
About KKR:
KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business. References to KKR's investments may include the activities of its sponsored funds. For additional information about KKR & Co. Inc. (NYSE:KKR), please visit KKR's website at www.kkr.com and on Twitter @KKR_Co.
Press Contacts:
BlackRock
Geeta Kana
geeta.kana@blackrock.com
Phone: +44 (0)20 7743 4361 | Mobile: +44 7468 711506
KKR
Finsbury
Simon Moyse
simon.moyse@finsbury.com
Mobile: +971 55 551 3621
BlackRock helps investors build better financial futures. As a fiduciary to investors and a leading provider of financial technology, our clients turn to us for the solutions they need when planning for their most important goals. As of March 31, 2019, the firm managed approximately US $6.52 trillion in assets on behalf of investors worldwide. For additional information on BlackRock, please visit www.blackrock.com
About KKR:
KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business. References to KKR's investments may include the activities of its sponsored funds. For additional information about KKR & Co. Inc. (NYSE:KKR), please visit KKR's website at www.kkr.com and on Twitter @KKR_Co.
Press Contacts:
BlackRock
Geeta Kana
geeta.kana@blackrock.com
Phone: +44 (0)20 7743 4361 | Mobile: +44 7468 711506
KKR
Finsbury
Simon Moyse
simon.moyse@finsbury.com
Mobile: +971 55 551 3621
