Record $20.7bn investment deal for Adnoc's gas pipelines

Six global names pay $10.1bn upfront for 49% share of leasing rights to Abu Dhabi energy infrastructure assets for 20 years

A consortium of the world’s leading infrastructure and sovereign wealth funds signed an agreement worth $20.7 billion (Dh76bn) to invest in Abu Dhabi’s natural gas pipelines infrastructure.

The Abu Dhabi National Oil Company said on Tuesday it attracted significant capital into its lucrative midstream assets from Global Infrastructure Partners, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board, South Korea's NH Investment & Securities and Italy’s Snam.

The transaction, the largest single global energy infrastructure deal this year - and the region's biggest - will unlock $10.1bn in foreign direct investment into the UAE.

The consortium will take a 49 per cent stake in Adnoc Gas Pipeline Assets, which has the leasing rights to 38 pipelines for 20 years. The pipelines network spans 982.3 kilometres taking Adnoc’s gas to local customers in the UAE. Adnoc holds the majority stake, with 51 per cent interest.

The multibillion dollar transaction allows Adnoc to "tap new pools of global institutional investment capital”, while retaining full operating control over the assets, the company said. The consortium meanwhile, benefits from investing in quality energy infrastructure “with low risk profile” and steady cash flow generation.

"This milestone transaction demonstrates the trust and confidence placed in Adnoc by the global investment community and unlocks significant value from our pipeline portfolio, following last year’s groundbreaking oil pipeline infrastructure investment partnership,” said Adnoc group chief executive and Minister of State, Dr Sultan Al Jaber.

Tuesday's announcement marks the second capital inflow into Abu Dhabi’s energy infrastructure following $5bn last year from investors including BlackRock and KKR for leasing rights to its oil pipelines.

The investment reflects "continued strong interest in Adnoc's low-risk, income-generating assets," setting another benchmark for large-scale energy infrastructure investments in the UAE and the wider region, Dr Al Jaber added.

Clockwise from top left, Dr Sultan Al Jaber, Adnoc Group chief executive, Global Infrastructure Partners chairman Adebayo Ogunlesi, Brookfield chief executive Bruce Flatt, Snam chief executive Marco Alvera, chief executive of NH Investment & Securities Young-Chae Jeong and Ziad Hindo of the Ontario Teachers' Pension Plan Board. Courtesy Adnoc

Global Infrastructure Partners chairman and managing partner Adebayo Ogunlesi said "Adnoc's gas network is a core piece of midstream infrastructure in the UAE and this transaction presents a unique opportunity to invest in an asset of this quality and importance, while also supporting Adnoc in their smart growth strategy.”

The Adnoc deal allows sophisticated investors such as Brookfield Asset Management to buy into "high quality, essential assets generating stable and predictable cash flows” in the energy sector, its chief executive Bruce Flatt, said.

The transaction, which marks the Ontario Teachers’ first foray into the Middle East, provides for “stable long-term cash flows” as well as geographic diversification for the Canadian pension fund, said Ziad Hindo, its chief investment officer.

Young-Chae Jeong, chairman and chief executive of NH Investment & Securities said the transaction was symbolic of South Korea’s growing presence in the "global infrastructure space”.

Snam chief executive Marco Alverà, said the company's aim "is to promote further cooperation opportunities, particularly in the energy transition".

"This transaction was carried out remotely over the past months, testifying the resilience of our company and its willingness to continue its growth path,” he said.

On Tuesday Dr Al Jaber told Bloomberg TV that the transaction allows Adnoc to "drive growth" while "maintaining sovereignty over its assets".

He also said he anticipated a U-shaped recovery of the global economy, characterised by a slow decline and gradual growth rather than a sharp rebound.