At Abu Dhabi National Oil Co. (ADNOC), it has almost been like a parade of global institutional Wall Street investors coming through the doors over the last five years. BlackRock Inc., Apollo Global Management Inc., KKR & Co., Brookfield Asset Management Inc., and many more, have all made their way to the state-owned oil producer to partner in billions of dollars of financial deals unveiled as part of its ongoing transformation, the Gulf Intelligence Special Report reveals.
Four ADNOC subsidiaries have successfully listed on the Abu Dhabi stock market since, the most recent last week was Borouge, its petrochemicals JV with Borealis, which became the largest IPO in Abu Dhabi to date when it listed on the ADX on June 3rd. This has helped attract new capital and boost the emirate’s exchange. ADNOC group of companies sold bonds in foreign markets for the first time, tapping a new capital market segment that has generated long-term funding and improved its capital structure. ADNOC is seeding a new industrial cluster further up the coast from Abu Dhabi, TA’ZIZ, which is luring new partners and millions of dollars in investments in petrochemicals manufacturing, and which promises to fire up the wider economy.
“I see possibilities of partnerships at every turn,’’ Dr. Sultan Ahmed Al Jaber, ADNOC’s chief executive officer and managing director said at the Adipec conference in November 2021. The global oil industry needs to invest more than $600 billion a year until 2030 to meet energy demand and “we require a new model of partnership across the industry’’ to unlock opportunities, he said. Some of the company’s initiatives aimed at unlocking value have led to first-of-their-kind deals in the Middle East. In 2019 ADNOC announced a pipeline transaction with BlackRock, the world’s biggest asset manager, and KKR, that helped it generate about $5 billion of initial cash.
ADNOC has generated some $65 billion in foreign investment from various joint ventures and financial initiatives since 2016 as it implemented a new strategy that lays emphasis on partnerships as a way of using capital more efficiently, unlocking growth opportunities and improving returns. Several of these have had ramifications for the wider United Arab Emirates economy, the Arab world’s second-biggest after Saudi Arabia.
ADNOC has been responsible since its founding in 1971 for developing Abu Dhabi’s oil and gas reserves, the world’s sixth biggest, with a significant exploration and development program ongoing. It makes a major contribution to Abu Dhabi government revenue and GDP. As pressure on the energy industry grew following the plunge in global oil prices in 2015, ADNOC drew up an expanded partnership model to more actively manage its businesses, unlock value and improve performance, all of which now form a part of its ambitious 2030 Strategy. This includes increasing crude oil production capacity, delivering gas self-sufficiency, expanding within downstream industries such as petrochemicals and developing a more commercial attitude to new partner relationships.
Translated into numbers, that involves boosting crude oil production capacity to 5 million barrels a day from over 4 million barrels now, unlocking Abu Dhabi’s vast gas resources and increasing petrochemicals production three-fold by 2025 from 4.5 mtpa in 2016. As the world increasingly needs more energy with lower emissions, top tier investors from around the globe have been drawn to Abu Dhabi, as a reliable supplier of some of the lowest cost, lowest carbon barrels available anywhere.
