Abu Dhabi’s garage sale is continuing apace. The emirate on Tuesday sold a 49% stake in state oil giant ADNOC’s gas pipeline business to a host of blue-chip international investors. It’s the latest transaction in a scheme that had already seen it raise $19 billion from similar sales since 2016. Covid-19 appears to have helped inflate the latest $10 billion haul.
The deal puts an enterprise value of $20.7 billion on 982 kilometres of ADNOC pipeline. That’s significantly more than the $15 billion price tag mooted back in January. It’s all the more surprising given the virus-induced collapse in oil prices. Royal Dutch Shell’s share price, for example, has dropped over 40% this year.
One factor is that the assets look appealingly safe. ADNOC will pay a fee to use the pipelines, minus a tariff that will depend on the volume of gas pumped through them. These cash flows should be relatively steady, because the tariff is subject to a floor and a cap, and because Abu Dhabi citizens need the gas for their power needs.
Investors including Singaporean sovereign fund GIC, Brookfield Asset Management and Global Infrastructure Partners face the risk that Abu Dhabi’s antagonist Qatar cuts off gas supplies to the emirate. But that has not yet happened despite Abu Dhabi and its neighbours blockading Doha since 2017.
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