The UAE has emerged as the hub of foreign direct investments within the Middle East and North Africa and the prospects of attracting more FDI this year, particularly in the oil and gas sector of the country, are bright, said UAE Minister of State Ahmed Al Sayegh.
“The UAE is a prime destination for the FDI,” Mr Al Sayegh, who is also chairman of the capital’s financial hub Abu Dhabi Global Market, said on Wednesday at the Bloomberg Invest conference. “This year continues to be promising.”
The UAE, the second-biggest economy in the Arabian Gulf, attracted $15 billion (Dh50.1bn) in 2018, accounting for more than 22 per cent of the total FDI inflows into the Mena region, driven by investments in the country’s oil and gas sector.
Over the past few years the energy sector in the country has attracted more than $21bn in both on and offshore concessions and through investments into the extended hydrocarbon value chain. Abu Dhabi National Oil Company, one of the global energy majors, has brought in international partners such Italy’s Eni and Austria's OMV for different projects, significantly expanding its refining capacity, he said.
Adnoc's crude trading unit, which was formally announced last year as part of it its strategy to expand its revenue streams and beef up its sales of crude and products, will be domiciled in the ADGM to benefit from the financial hub’s “friendly trading rules and regulations”, Mr Al Sayegh noted.
The investment by Adnoc and its foreign partners is a cornerstone of a $45bn strategy to expand the company’s downstream business across petrochemicals and derivatives and create a foundation for manufacturing ecosystem that will deliver lasting value for the UAE, he noted.
“Emerging as a magnet for FDIs, both upstream and downstream, is Abu Dhabi’s oil and gas industry,” Mr Al Sayegh said. “More importantly [Adnoc is] creating expertise in this space [oil and gas sector] and investors are learning more and more about the opportunities in the UAE.”
Regarding Mubadala Investment Company’s deal announced at the start of the week to sell a significant minority stake in Europe’s biggest privately owned integrated energy firm Compania Espanola de Petroleos (Cepsa) to private equity firm Carlyle Group, the minister said it came about precisely because of the expertise and partnerships the UAE has in the energy sector.
Mubadala, Abu Dhabi’s strategic investment arm, this week agreed to sell between 30 and 40 per cent in the Spanish oil firm while Mubadala will remain a majority stakeholder in the firm. The deal puts the entire enterprise value of Cepsa at $12bn, according to Mubadala, which did not disclose the exact size of the transaction on Monday.
“These are deals that are possible because of our expertise and our partnerships and leveraging these partnerships is what Mubadala does best,” Mr Al Sayegh said. “In this case, it [the deal] has brought not only value for the country but most importantly proved that from Abu Dhabi we can create global news that make a big difference in [not only] how our country is perceived but how the industry [oil and gas] is going to invest in the future.”
He said the Cepsa deal was about divestment but also about investments, solidifying the international impression that UAE and companies like Mubadala know how to invest in this space.
“That is how we have started the year. It is exciting time for us in Abu Dhabi."