Business Bureau, Gulf Today

Dr Sultan Ahmed Al Jaber, UAE Minister of State and Group CEO of the Abu Dhabi National Oil Company (Adnoc) met with Alexander Novak, Minister of Energy of the Russian Federation, during a visit to Moscow, as Adnoc explores opportunities to expand its strategic partnership and investment base across its entire value chain.

During the meeting, Dr Al Jaber conveyed the greetings of the UAE leadership to the government and people of Russia and reaffirmed the deep-rooted ties between both countries, stressing the keenness of the UAE to strengthen bilateral relations. Bilateral trade between Russia and the UAE topped Dhs11 billion last year, a 21 per cent increase on the previous year. Relations were further strengthened last year when His Highness Sheikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces met President Putin and both leaders signed a declaration of strategic partnership covering political, security and economic spheres.

Dr Al Jaber noted his appreciation for Russia’s role in the Opec/ Non Opec Cooperation Agreement, which continues to have a positive impact on balancing oil markets. Dr Sultan elaborated on Adnoc’s ongoing transformation, centered on maximizing value, and expanding the company’s strategic partnership base to stay ahead of the world’s growing demand for energy.

Al Jaber said: “This visit reflects the strong and friendly ties between the UAE and Russia. As our countries continue to build on strong trade relations, there is significant potential for collaboration in the energy sector. Adnoc is open to exploring partnership and co-investment opportunities with Russian energy companies across the full value chain where they make economic sense and drive significant returns for both sides.

“As we respond to the evolving energy landscape, driven by growing demand particularly in Asia, Adnoc is forging ties with new partners from around the world, who share our creative vision and are prepared to put skin in the game through capital, technology and market access.” The expanded approach to partnership is a key element of Adnoc’s 2030 smart growth strategy, focused on growth and opportunity across the upstream and downstream business. Adnoc is on track to increase its crude oil production capacity to 4 million barrels per day (mmbpd) by 2020, and 5mmbpd by 2030, while becoming self-sufficient and eventually a net exporter of natural gas. In addition, a significant expansion of the downstream business is underway, centered on the Ruwais industrial hub, where substantial foreign direct investment has already been attracted with the aim of creating the world’s largest fully integrated refining and petrochemicals complex.

Adnoc is one of the world’s leading diversified energy and petrochemicals groups with a daily output of about 3 million barrels of oil and 10.5 billion cubic feet of natural gas. With 14 specialist subsidiary and joint venture companies, Adnoc is a primary catalyst for the UAE’s growth and diversification.

The Abu Dhabi National Oil Company has recently announced that it has closed its 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 (Adnoc Oil Pipelines), with ADRPBF acquiring 3% and Adnoc holding the remaining 57%. Adnoc Oil Pipelines leases Adnoc’s interest in 18 pipelines, transporting stabilised 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.

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.