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Adnoc closes $4bn pipeline infra investment with Black Rock, KKR

Transaction was signed in Feb'19 paving the way for American companies to acquire 40% stake in Adnoc Oil Pipelines

Adnoc is a national oil company in the UAE.
Adnoc is a national oil company in the UAE.

Abu Dhabi National Oil Company (Adnoc) has closed its pipeline infrastructure investment agreement with Black Rock and KKR, following a transaction signed in February 2019 that would see the American companies investing $4bn (AED14.7bn) in Adnoc's midstream pipeline assets.

Following this announcement, Abu Dhabi Retirement Pensions and Benefits Fund (ADRPBF) agreed to invest a further $300m, with its transaction due to close in the next quarter. 

This agreement will see Black Rock and KKR acquire a combined 40% stake in a newly formed entity, Adnoc Oil Pipelines, with ADRPBF acquiring 3% and Adnoc holding the remaining 57%.

Adnoc Oil Pipelines leases Adnoc’s interest in 18 pipelines that span 750km, transporting stabilised crude oil and condensate across Adnoc’s offshore and onshore upstream concessions, for a 23-year period.

The 18 pipelines have a total aggregate capacity of approximately 13,000 mbblpd (gross), and are key midstream assets for the UAE capital’s energy ecosystem, since they transport much of Abu Dhabi’s crude oil from Adnoc’s onshore and offshore upstream assets to key take-away outlets and terminals for conversion or export.  

Adnoc Oil Pipelines 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.

The KKR and Black Rock investment, which was successfully funded through their global infrastructure funds and financed by a syndicate of international banks, was oversubscribed during its syndication.

The leasing investment structure marks the first time that global and domestic institutional investors have deployed long-term equity capital into key midstream infrastructure assets of a national oil company in the UAE.

Commenting on the announcement, Ahmed Jasim Al Zaabi, group director of 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.”

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