Snam, investment funds buy 49% stake in Adnoc gas pipeline assets

Italy’s energy infrastructure operator, Snam, has partnered with five international funds to invest in a 49% stake in Adnoc Gas Pipelines, in a deal valuing the Abu Dhabi company in $20.7 billion.

The transaction, announced by Adnoc and the other companies on Tuesday, is expected to close in July. Once complete, the newly created subsidiary of Adnoc will lease rights to 38 pipelines covering a total of 982.3 kilometers, Kallanish Energy reports.

The consortium of investors comprises of Global Infrastructure Partners (GIP), Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board, South Korea’s NH Investment & Securities and Snam. Together they will pay $10.1 billion for the stake – of which $8 billion have already been secured from a pool of international banks, Snam said.

The deal is one of the largest global energy infrastructure transactions and the first acquisition Snam undertakes outside of Europe. The Italian firm is the only industrial operator among the institutional investors.

“Under the terms of the agreement, Adnoc will lease its ownership interest in the assets to Adnoc Gas Pipelines for 20 years in return for a volume-based tariff subject to a floor and a cap,” the state oil and gas company explained.

Ownership, operations management and control of the network, which connects Adnoc’s upstream assets to local UAE off-takers, remains with Adnoc. The pipelines will transport gas, liquefied natural gas (LNG) and natural gas liquids (NGL).

“Adnoc’s gas network is a core piece of midstream infrastructure in the UAE and this transaction presents a unique opportunity to invest in an asset of this quality and importance,” said GIP’s chairman Adebayo Ogunlesi.

“With this strategic transaction, we strengthen our international footprint by entering a country and a region that are key to our sector,” said Snam’s CEO Marco Alvera. Geographic expansion and investment diversification were also mentioned as key drivers to other members of the consortium.

This post appeared first on Kallanish Energy News.