Singapore's GIC to invest in Adnoc pipeline deal alongside BlackRock and KKR

Investment of $600m by Singapore's sovereign wealth fund pushes total investment in Adnoc's crude infrastructure to about $5bn

The UAE is the most competitive economy across the Arab world and North Africa. Chris Whiteoak / The National

Singapore’s sovereign wealth fund GIC is investing in Abu Dhabi National Oil Company’s pipeline infrastructure investment scheme, alongside BlackRock and KKR as co-investors, pushing the total deal value to about $5 billion (Dh18.4bn).

GIC, which has more than $100bn in assets in 40 countries, is investing $600 million in the crude pipeline infrastructure, Adnoc said in a statement on Tuesday.

The follow-on investment will give GIC a 6 per cent stake in a newly formed entity, Adnoc Oil Pipelines. BlackRock and KKR together hold a 40 per cent stake, Abu Dhabi Retirement Pensions and Benefits Fund (ADRPBF) 3 per cent and state-controlled oil and gas major Adnoc owns the remaining 51 per cent.

The transaction is expected to close before the end of 2019, subject to necessary conditions and approvals, Adnoc said.

“With nearly $5bn of total investment, the overall agreement is testimony to the global investment community’s positive view on the attractiveness of both the UAE’s long-term potential, as well as the quality of Adnoc’s substantial infrastructure asset base,” said Ahmed Jasim Al Zaabi, group director of finance and investment at Adnoc.

In June, Adnoc completed a $4bn financing deal with BlackRock, the world's largest asset manager, and global private equity firm KKR for its pipeline infrastructure. The deal, financed by a group of international banks through the private equity companies, was oversubscribed during syndication. The ADRPBF contributed $300m to the deal.

In exchange for receiving $4bn upfront from BlackRock and KKR, Adnoc is leasing 18 of its pipelines that total 750 kilometres in length and have 13 million barrels per day capacity over 23 years.

Adnoc retains sovereignty and management of the pipelines, which transport stabilised crude and condensate from its onshore and offshore fields to export and refining facilities.

Adnoc Oil Pipelines will receive a tariff from the state-owned company for how much crude and condensate it transports. As part of the framework, minimum volume commitments have been put in place.

New York-based KKR's investment in Adnoc's pipeline assets is the first direct investment it has made in the Middle East through its $7.4bn Global Infrastructure Investors Fund, although it has previously acquired pipeline assets in North and Central America. BlackRock, which has almost $6 trillion in assets under management, invested through its third Global Energy & Power Infrastructure Fund.

The agreement marks the first time that leading international financial institutions were able to make investments related to Adnoc's midstream assets following a competitive selection process by the company.

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 proactively managed its own portfolio of assets and capital.

The UAE accounts for 4 per cent of the world’s crude production, much of it from fields owned and operated by Adnoc. The company is not only opening up for co-investment in the UAE, it is also looking to form partnerships to invest with other major players elsewhere in the world. It has recently struck deals with Asian crude buyers in China, Japan and Indonesia, among others.

In early July, Adnoc signed an agreement with China National Offshore Oil Corporation to explore downstream opportunities as well as in the purchase and sale of liquefied natural gas (LNG).

Last week, the company signed a framework agreement with Indonesian state oil producer, Pertamina, covering opportunities within refining and petrochemicals, LNG, liquefied petroleum gas, aviation fuel and fuel retail in the Southeast Asian nation. The two companies will also look at investing in transportation, trading and storage in the UAE and other countries.