Abu Dhabi oil giant ADNOC considers drilling, fertilizer IPOs

Abu Dhabi is accelerating plans to sell shares in some oil and gas businesses as the government seeks to deepen its financial markets and diversify its sources of funding.

The state energy company, Abu Dhabi National Oil Co. (ADNOC), is considering initial public offerings of its drilling business and a fertilizer joint venture called Fertiglobe, according to people with knowledge of the plans. The deals could raise more than $1bn each, according to the people.

Petrostates in the Gulf are trying to bolster their economies after they were hit last year by coronavirus lockdowns and the crash in oil prices. They also want to diversify from fossil fuels by using money raised from their oil assets to invest in other industries.

Deliberations on the potential listings are ongoing and no final decisions have been made. Adnoc may retain the businesses or look at other ways of monetizing them, the people said.

Both ADNOC Drilling and Fertiglobe, a venture with Amsterdam-based OCI NV, are based in Abu Dhabi. OCI confirmed that it and ADNOC are considering an IPO of Fertiglobe.

ADNOC declined to comment.

$20bn drive
In recent years, international and local funds have invested more than $20bn in ADNOC assets such as pipelines and property. Last June, the company sold leasing rights over natural-gas pipelines to a consortium including Global Infrastructure Partners and Brookfield Asset Management, in a deal worth $10.1bn.

Still, its sole IPO to date was the listing of its fuel-retailing unit, Abu Dhabi National Oil Co. for Distribution, in 2017.

Oil-rich Abu Dhabi is the capital of the United Arab Emirates and holds most of the country’s crude deposits. The UAE is the third biggest producer in the Organization of Petroleum Exporting Countries, behind Saudi Arabia and Iraq.

Neighbouring Saudi Arabia – the world’s biggest oil exporter – has a similar strategy. It raised almost $30bn from the IPO of state energy firm Saudi Aramco in late 2019.

Last week, Aramco announced it was selling leasing rights in pipelines for $12.4bn to a consortium led by US investor EIG Global Energy Partners.

Reuters earlier reported the potential ADNOC IPOs.