Adnoc looks to reinvest proceeds from non-core assets in bid to expand

The company's 'primary focus' is on growing its upstream and downstream business in the UAE, chief financial officer says

The company's priority will remain developing upstream resources, said Adnoc Group chief financial officer, Ahmed Al Zaabi. Courtesy Adnoc

Adnoc will continue to monetise its non-core assets to reinvest in its main operations, with a focus on its home market, chief financial officer Ahmed Al Zaabi said.

"We will always remain focused on investing in developing our upstream resources. That goes without question, but we will also expand our downstream footprint here in the UAE," Mr Al Zaabi told The National in an interview.

State-owned Adnoc entered an agreement with Apollo Global Management to lease select real estate assets in a $5.5 billion (Dh 20.2bn) deal on Wednesday.

This came after an agreement in June with a consortium of the world’s leading infrastructure and sovereign wealth funds worth $20.7bn to invest in Abu Dhabi’s natural gas pipeline infrastructure.

The infrastructure deal, which came after a similar transaction involving Adnoc’s oil pipelines last year, was the largest in the energy sector so far this year.

Mr Al Zaabi said Adnoc was committed to providing opportunities for local investors as its efforts to attract foreign capital pick up pace.

"There's always going to be a place for local investors," he said.

Adnoc listed 10 per cent of its distribution business on the Abu Dhabi Securities Exchange in December 2017, allowing local investors to participate in the share offering.

In 2019, Abu Dhabi's pension fund also joined the $5bn oil pipeline lease agreement Adnoc signed with global investors led by BlackRock and KKR.

These deals have allowed the company to generate funds for investment from non-core assets at a time when Covid-19 and lower oil prices have placed pressure on budgets in the energy sector.

Globally, the value of new projects approved is set to fall more than 75 per cent this year to $47bn, according to Rystad Energy.

"We are, like everyone else, focused on preserving resources, optimising cost and maximising profitability," Mr Al Zaabi said.

"However, at the same time, we are also focused on our long-term goals and responsibly progressing our strategic projects."

The company's efforts at lowering its operating costs over the past four years have helped build resilience against current market dynamics, Mr Al Zaabi said.

He also remains confident there is more value to be unlocked from Adnoc's asset portfolio.

"We're still reviewing further opportunities and we'll be studying them," Mr Al Zaabi said.

"I'm confident we can unlock more going forward."

The company "will continue to evaluate international downstream opportunities that are attractive and fit within our strategy", he said.

Adnoc has looked at a number of investment opportunities abroad, including a huge project to build a refinery in India with Saudi Aramco to capture market share in one of Asia's fastest-growing economies.

"I must say, though, that our primary focus at the moment is growing and investing in our business here in the UAE,” Mr Al Zaabi said.

Adnoc plans to double its refining capacity and treble its petrochemicals capacity as part of a multibillion-dollar drive to attract foreign direct investment to its downstream operations.

In July, the company formed a partnership with Abu Dhabi’s industrial holding company, ADQ, to develop a chemicals manufacturing hub at Ruwais, the site of its refining and chemicals activity.