The Abu Dhabi National Oil Company (ADNOC) has signed a $20.7bn agreement with an alliance of infrastructure investors who will invest in specific assets in the company’s gas pipelines.
In a statement on Tuesday, ADNOC said the agreement includes Global Infrastructure Partners, Brookfield Asset Management, the Singapore’s sovereign wealth fund GIC, the Ontario Teachers’ Pension Plan (OTPP), NH Investment and Securities, and the Italian company SNAM. The agreement will attract foreign direct investment (FDI) of $10.1bn to the UAE.
The company added that investors will acquire a 49% stake in ADNOC Gas Pipes assets, a subsidiary of ADNOC. The subsidiary, which is newly established, has the rights to lease 38 pipelines, at a total length of 982.3 km. ADNOC will retain the remaining majority stake of 51%.
The agreement stipulates that ADNOC Gas Pipeline Assets will lease the share that ADNOC holds in a group of gas pipeline assets for a period of 20 years. This will occur in exchange for obtaining the right to use these assets with a tariff based on the quantities.
This agreement brings instant returns to ADNOC, amounting to AED 37.1bn. Its completion is subject to satisfying the accepted terms and conditions, and obtaining the approval of the relevant regulatory bodies.
The agreement supports Abu Dhabi’s ambitious goals in the gas sector, and provides investors with a unique opportunity to invest in excellent assets for low-risk energy infrastructure. It provides investors with stable and long-term cash flows from one of the world’s most important energy companies, in terms of credit rating.
The deal, which was sealed on Tuesday, comes after roughly six months of negotiations due to stock financing arrangements, and the negotiation of the terms of the debt package with banks.