Adnoc creates new subsidiary to monitor debt markets and explore funding opportunities

Adnoc headquarters in Abu Dhabi. Adnoc on Tuesday said it created a new, wholly-owned subsidiary, Adnoc Murban, to explore potential funding opportunities. Reuters

Abu Dhabi National Oil Company has created a new subsidiary to monitor the debt market and explore potential funding opportunities.

Adnoc Murban will become the primary debt capital markets issuing and rated entity for the company, it said in a statement on Tuesday.

Adnoc Murban is rated “AA” by S&P, “Aa2” by Moody’s Investor Services and “AA” by Fitch Ratings, aligned with those assigned to Adnoc’s shareholder, the emirate of Abu Dhabi.

AA and Aa2 are of high-quality ratings, which indicate the company's strong capacity to meet its financial commitments.

“These strong ratings reflect Adnoc’s conservative and robust financial profile, resilient operations, and the low cost and low carbon intensity of Adnoc Murban’s onshore production," Adnoc said.

Separately, Adnoc has requested the withdrawal of its group-level credit rating, first assigned by Fitch in February 2019, because of the establishment of Adnoc Murban as its primary capital markets issuing and rated entity.

Sovereign borrowers, government-related entities and corporate issuers are tapping into international debt markets to take advantage of low interest rates prevailing globally. Abu Dhabi Ports raised $1 bllion through the issuance of a 10-year bond last year. First Abu Dhabi Bank and other regional financial institutions and corporate borrowers also issued bonds in 2021.

The establishment of the new unit comes as the state oil producer aims to significantly increase its investment in hydrocarbons to raise its output capacity to five million barrels per day by 2030. It has awarded contracts to various companies to increase its production.

Last month, Adnoc's board approved plans to spend Dh466 billion ($126.88bn) between 2022 and 2026 to expand its upstream production capacity and downstream portfolio, as well as its low-carbon fuels business and clean energy ambitions.

It also revealed a significant increase in national reserves of four billion stock-tank barrels (STB) of oil and 16 trillion standard cubic feet of natural gas.

These additional reserves increase the UAE’s hydrocarbon reserves base to 111 billion barrels of oil and 289 trillion standard cf of natural gas, Adnoc said.

Adnoc raised more than $1.1bn from an 11 per cent sale of shares in its drilling unit through an initial public offering last year.

The oil producer is also set to become a shareholder in Abu Dhabi's clean energy company Masdar, along with Taqa, in the coming months as the UAE develops new renewable energy projects to cut emissions.