Abu Dhabi’s ADNOC hires BAML, Mizuho for natural gas pipelines deal

Abu Dhabi National Oil Company (ADNOC) has hired Bank of America Merrill Lynch and Mizuho to arrange the lease of its natural gas pipeline assets, sources familiar with the matter said, as the oil giant establishes new partnerships in an era of lower oil prices.

ADNOC, which manages almost all of the proven oil reserves in the United Arab Emirates, has embarked on a major shake-up over the past two years to cut costs, boost efficiency and monetise its assets.

Earlier this year it agreed a $4bn midstream pipeline infrastructure deal with KKR and BlackRock.

The company is now looking to raise funds by leveraging its natural gas pipelines in a similar deal and has mandated Bank of America Merrill Lynch and Mizuho as transaction advisers, two sources familiar with the matter said.

“As we have demonstrated over the last two years, we are actively exploring a number of potential options to optimise and maximise value from across our portfolio of assets,” an ADNOC spokesman said in an emailed statement.

“Some of these options are still at an early stage of review and we will update the market as is appropriate and in due course.”

BAML and Mizuho declined to comment.

The sources, who estimated the value of the gas pipeline assets at around $12 to $15bn, said ADNOC is looking to use a similar structure to the one used with KKR and BlackRock. In that case, the firm set up a new entity which leased ADNOC’s interests in its crude and condensate pipelines to the investment firms.

The advantage of the structure is that by leasing the assets for a certain period of time, ADNOC can raise financing without losing ownership of its assets.

ADNOC produces around 3 million barrels of oil per day, and 10.5 billion cubic feet of raw gas a day.