ADNOC inks $10 bln deal, keeps tight control of costs amid market downturn (updated)

NH Investment & Securities Co

23/06/2020 08:50

(Combines stories, adds details, quotes)
    By Rania El Gamal
    DUBAI, June 23 (Reuters) - Abu Dhabi National Oil Company
(ADNOC) said on Tuesday it had signed a $10 billion gas
infrastructure deal with a consortium of investors, while its
chief executive told Reuters the company would keep a tight lid
on costs amid low oil prices.
    The mega pipeline deal is the world's single largest energy
infrastructure investment this year, CEO Sultan al-Jaber said in
a phone interview.
    A consortium of Global Infrastructure Partners (GIP),
Brookfield Asset Management, Singapore's sovereign wealth fund
GIC, Ontario Teachers' Pension Plan Board, NH Investment &
Securities and Italy's Snam will invest in select ADNOC gas
pipeline assets valued at $20.7 billion, ADNOC said.
    The venture will bring $10.1 billion in foreign direct
investment to Abu Dhabi, where real gross domestic product (GDP)
is expected to contract by 7.5% this year, according to S&P
Global Ratings.
    The group of investors will acquire a 49% stake in newly
formed subsidiary ADNOC Gas Pipeline Assets, while ADNOC will
hold the remaining 51%.  urn:newsml:reuters.com:*:nL8N2E00R4
    The deal comes as the world's top oil and gas companies,
including ADNOC, scramble to control costs in response to the
coronavirus crisis which has hammered oil demand and prices.
    A transformation strategy embarked on four years ago has
helped ADNOC adapt more quickly to market changes, and it would
continue to work with strategic investors to attract foreign
capital and maximise value from its resources, al-Jaber said. 
    "In today's low price environment we must focus on the
things we know we can control and that is of course our cost, we
need to remain agile," he said.
    Under the gas infrastructure deal, ADNOC will lease its
ownership of the pipeline assets to ADNOC Gas Pipelines for 20
years in return for a volume-based tariff. The new subsidiary
will distribute 100% of free cash to the investors as quarterly
dividends, ADNOC said.
    Al-Jaber said the OPEC+ pact to cut oil supply has boosted
confidence and there have been signs of a tighter oil market in
recent weeks, with demand recovering as global economies slowly
reopen. That trend is expected to continue for the rest of the
year, he added.

 (Reporting by Rania El Gamal, editing by Louise Heavens,
Kirsten Donovan)
 ((rania.elgamal@thomsonreuters.com; +971 562 160 434; Reuters
Messaging: rania.elgamal.reuters.com@reuters.net ; Twitter:
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