ADNOC, KKR, BlackRock complete $4B pipeline transaction

Abu Dhabi’s ADNOC has closed the previously signed multi-billion-dollar pipeline infrastructure partnership deal with KKR and BlackRock, two of the world’s leading institutional investment funds.

ADNOC said on Thursday it had wrapped up the $4 billion deal which was originally announced in February 2019 when KKR and BlackRock signed an initial investment agreement to invest $4 billion into the midstream pipeline assets.

Following the February announcement, the Abu Dhabi Retirement Pensions and Benefits Fund (ADRPBF) agreed to invest a further $300m.  This investment is due to close in the next quarter, ADNOC said.

As part of the transaction, a newly formed entity called ADNOC Oil Pipelines will lease ADNOC’s interest in 18 pipelines, transporting stabilized crude oil and condensate across ADNOC’s offshore and onshore upstream concessions, for a 23-year period.

The entity will, in turn, receive a tariff payable by ADNOC, for its share of volume of crude and condensate that flows through the pipelines, backed by minimum volume commitments.

Funds managed by BlackRock and KKR will collectively hold a 40% interest in the entity, while ADNOC will hold the remaining 60% majority stake. Sovereignty over the pipelines and management of pipeline operations remain with ADNOC.

The collection of 18 pipelines being leased by ADNOC Oil Pipelines has a total length of over 750km, and a total aggregate capacity of approximately 13,000 Mbblpd (gross).

“These assets represent key midstream infrastructure for Abu Dhabi’s energy ecosystem, allowing for the vast majority of Abu Dhabi’s crude oil production to be transported from ADNOC’s onshore and offshore upstream assets, to Abu Dhabi’s key take-away outlets and terminals for conversion to other high-value products, or on to global energy markets,” ADNOC said.

The pipelines have underlying long-term minimum volume commitments and are supported by stable crude oil production from ADNOC Onshore and ADNOC Offshore – the leading onshore and offshore operating companies in ADNOC with global IOCs as JV partners, each with an average remaining concession life of over 35 years, ADBOC added.

Offshore Energy Today Staff

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