Adnoc looks for new partnerships, IPOs

Abu Dhabi National Oil Company, popularly known as Adnoc, is looking to float some of its services businesses and enter tie-ups with global investors to help it create new revenue streams and secure more market access.

The Abu Dhabi-based company, which is responsible for most of the country's 2.9 million barrels a day of output, said on Monday it has already begun talks about the planned partnerships and expects to announce them later this year.

Dr Sultan Ahmed Al Jaber, Minister of State and Adnoc Group CEO, said shifting global trends are creating a new energy landscape where new rules of engagement are required.

"In this new energy era, we need more creative strategies and more flexible business models to capture growth," Al Jaber said.

Partial listing
The company, which already has ventures with international companies such as BP, Total and Exxon Mobil Corp, will expand its partnerships into refining and petrochemicals as well as other areas like pipelines and storage. Central to Adnoc's new approach will be the more active management of its portfolio of assets and businesses.

"Adnoc is also considering the IPO of minority stakes of some of its services businesses which have attractive investment and growth profiles. Such IPOs would support the growth and expansion of the UAE's private sector and equity capital markets and will allow the public, and other investors, to invest alongside Adnoc and benefit from the future growth of these assets," according to the statement.

Adnoc, which has plans to boost production capacity to 3.5 million barrels a day by 2018, will continue to be a committed, long-term majority shareholder in any businesses that are listed. Importantly, there will be no IPO of Adnoc, the group holding company. Adnoc will remain fully owned by the Government of Abu Dhabi, it added.

"Adnoc only plans to list minority stakes in some of its services businesses on local equity markets, rather than an initial public offering [IPO] of the holding company. Adnoc will remain fully owned by the government of Abu Dhabi," Al Jaber said.

"This is very much in line with what other Middle East or oil-producing countries are looking into due to the low oil price environment," Abishek Deshpande, chief energy analyst at Natixis, said of Adnoc's plans.

Plans to list some of Adnoc's services businesses come as other Gulf states, such as Saudi Arabia and Oman, have also embarked on floating energy assets in an era of cheap crude.

Saudi oil company Aramco is planning a listing next year to raise as much as $100 billion to invest in new industries, as the kingdom seeks to diversify beyond oil exports as part of its 'Vision 2030' plan.

Oman said earlier this year it planned to offer shares in some state-owned downstream energy companies to the public.

"All these countries have their own version of [Saudi Arabia's] Vision 2030 that include a significant diversification component," Helima Croft, global head of commodity strategy at RBC Capital Markets LLC, said, adding it raised the question of whether Kuwait Petroleum Corp could be next.

New partners
Adnoc has been talking to banks about the listings, with the company's profitable businesses likely to be floated, a source familiar with the deal said. The group has already begun to rationalise its businesses and a merger of three of its shipping and marine services businesses is expected to be completed by the end of the year. It also has another services business called Adnoc Distribution which operates service stations across the UAE and supplies aviation fuels.

The new initiative will bring significant benefits to the UAE and its citizens. Most importantly, it will create new, high-skilled jobs and attractive career opportunities across all parts of the Adnoc value chain.

It is also expected to create greater commercial opportunities for the UAE private sector, SMEs and other Adnoc suppliers and will provide an additional boost to the domestic economy, as well as to the UAE's own in-country value creation. Lastly, it will also increase foreign direct investment, technology and knowledge transfer into the UAE.

"We are looking for partners who are forward-thinking and fast-acting. We want value-add partners who share our values and are willing to contribute both capital and technological expertise for the joint pursuit of new growth opportunities and attractive returns," Al Jaber said.

-Source: Khaleej Times