ABU DHABI, UAE – ADNOC has entered a midstream pipeline infrastructure partnership with institutional investors KKR and BlackRock.
They have agreed to form a new entity called ADNOC Oil Pipelines – Sole Proprietorship LLC (ADNOC Oil Pipelines). Over a 23-year period this will lease ADNOC’s interest in 18 pipelines transporting stabilized crude and condensate across its offshore and onshore upstream concessions.
In turn, the entity will receive a tariff, payable by ADNOC, for its share of volume of crude and condensate flowing through the pipelines, backed by minimum volume commitments.
ADNOC will hold a 60% controlling stake and will retain sovereignty over the pipelines and management of pipeline operations, with BlackRock and KKR assigned the remaining 40%.
The transaction should provide ADNOC with upfront proceeds of around $4 billion and should go through this summer, subject to closing conditions and regulatory approvals.
It marks the first time that leading global institutional investors have deployed capital into midstream infrastructure assets held by an NOC in the Middle East, ADNOC said.
ADNOC Infrastructure LLC, which will manage the controlling interest in the new entity, will likely expand its role in future as a vehicle for infrastructure investment.
The 18 pipelines that will be leased by ADNOC Oil Pipelines transport around 13,000 Mb/d of oil from fields developed byADNOC Offshore and ADNOC Onshore in partnership with various IOCs.
In each case the average remaining concession life is more than 35 years.