Abu Dhabi National Oil Company (Adnoc) has entered into a $4 billion agreement with US investment firms BlackRock and KKR, the state oil producer has announced.

As part of the midstream deal, a newly created entity called Adnoc Oil Pipelines will lease 18 of Adnoc’s pipelines, which transport crude oil and condensate across Adnoc’s offshore and onshore concessions, for a 23-year period.

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Adnoc investment plans

In return, Adnoc Oil Pipelines will receive a tariff payment from Adnoc for the volume of crude and condensate that flows through the pipelines, which is backed by minimum volume commitments. Funds managed by BlackRock and KKR will form a consortium to hold a 40 per cent interest in the pipeline company, with Adnoc to hold the remaining 60 per cent.

The transaction is expected to result in upfront proceeds of $4 billion and is expected to close in the third-quarter of 2019.

In a statement released about the transaction, Adnoc said it was laying the groundwork for “additional infrastructure-related investment opportunities with institutional investors”.

Adnoc’s 60 per cent equity stake in the pipeline company will be held through Adnoc Infrastructure, a 100 per cent-owned Adnoc subsidiary, which also holds Adnoc’s 100 per cent stake in Abu Dhabi Crude Oil Pipeline (Adcop). Adnoc Infrastructure is expected to add further Adnoc assets and become a key vehicle for attracting investment in the emirate’s oil sector.

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