Abu Dhabi’s ADNOC seals $5.8bn refining and trading deal with Eni and OMV
Agreement sees Italian firm take 20% stake while Austria’s OMV to secure 15% in Abu Dhabi National Oil Company’s refinery
Abu Dhabi — Italy’s Eni and Austria’s OMV have agreed to pay a combined $5.8bn to take a stake in Abu Dhabi National Oil Company’s (ADNOC’s) refining business and establish a new trading operation owned by the three partners.
The transaction, which expands ADNOC’s access to European markets, furthers Eni’s diversification away from Africa and gives OMV a downstream oil business outside Europe. It was hailed as a “one of a kind” deal by ADNOC CEO Sultan al-Jaber.
“The whole oil and gas industry hasn’t seen a transaction of this size and sophistication,” he said.
Under the agreement, Eni and OMV will acquire a 20% and a 15% share in ADNOC Refining respectively, with ADNOC owning the remaining 65%, the three companies said on Sunday.
The partners will own the same proportions of the joint trading venture, they said.
OMV said it would pay about $2.5bn, while Eni said it would pay about $3.3bn, giving ADNOC Refining, which has a total refining capacity of 922,000 barrels per day, an enterprise value of $19.3bn.
The agreement includes output from the Ruwais Refinery, the fourth-largest single site refinery in the world.
Expanded market access
The new trading venture will expand market access for ADNOC Refining’s products with export volumes equivalent to about 70% of throughput.
“We are already well-positioned in Asia and we want to increase our market share there... but this will also help us to have access to European markets and beyond,” al-Jaber said.
Eni has signed several deals in the Middle East in recent months as it expands outside Africa where it is the biggest foreign oil and gas producer.
The company’s CEO, Claudio Descalzi, said the partnership would increase its global refining capacity by 35%.
“This transaction, which allows us to enter the United Arab Emirates’ downstream sector... [will make] Eni’s overall portfolio more geographically diversified, more balanced along the value chain, more efficient and more resilient to cope with market volatility,” he said.
OMV described the deal, which is set to close in the third quarter of 2019, as a major milestone in relation to its “Strategy 2025” plan. It said it would finance the deal primarily out of its cash flow.
“With [this transaction] OMV has established a strong integrated position in Abu Dhabi... spanning from upstream production to refining and trading and petrochemicals,” CEO Rainer Seele said.
Founded in 1971, ADNOC has undergone major changes since Al-Jaber’s appointment in 2016, part of wider economic reforms led by Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al- Nahyan, who witnessed the signing of the three-way agreement.
Al-Jaber has embarked on privatising its services businesses, ventured into oil trading and expanded partnerships with strategic investors.