Abu Dhabi National Oil Co. (ADNOC) entered into a landmark multibillion-dollar midstream pipeline infrastructure partnership with institutional investors KKR and BlackRock. Newly formed 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.
The 18 pipelines leased by ADNOC Oil Pipelines have a total length of more than 750 km and a total aggregate capacity of about 13 million b/d. These assets move most of Abu Dhabi’s crude oil production to sites for either conversion to other products or shipment to global energy markets. The pipelines have underlying long-term minimum volume commitments and are supported by stable crude oil production from ADNOC Onshore and ADNOC Offshore with global international oil companies as joint-venture partners, each with an average remaining concession life greater than 35 years.
Funds managed by BlackRock and KKR will form a consortium to collectively hold a 40% interest in ADNOC Oil Pipelines, while ADNOC will hold the remaining 60% majority stake. Sovereignty over the pipelines and management of pipeline operations remain with ADNOC. The transaction will result in upfront proceeds of approximately $4 billion to ADNOC and is expected to close third-quarter 2019, subject to customary closing conditions and regulatory approvals.
In conjunction with this transaction, ADNOC is laying the groundwork for additional infrastructure-related investment opportunities with institutional investors.