ADNOC is considering a possible sale of a stake in its $20 billion refining unit. Reportedly Abu Dhabi’s government owned Oil Company has appointed Goldman Sachs Group and HSBC Holdings as advisors on the matter.
Abu Dhabi National Oil Co more popularly known as ADNOC is reviewing offers from potential partners who could buy as much as 40 % of its refining business, said the people, who asked not to be identified because the discussions are private. A 40% stake could be valued at $8 billion.
Although no official comments have been made by the either ADNOC or Goldman Sachs Group and HSBC Holdings, the company had reportedly received significant interest in its effort to attract partners across its businesses.
Adnoc and other Middle Eastern crude producers, including state companies in Saudi Arabia and Kuwait, are expanding their capacity to process oil into refined fuels and petrochemicals to boost income and diversify away from sales of the raw commodity. They’re building refineries at home and in the US and Asia, their biggest market for oil.
Abu Dhabi, the capital of the United Arab Emirates and holder of most of the country’s crude reserves, wants Adnoc to squeeze more profit from the emirate’s hydrocarbon wealth to underpin economic growth. To tap new funding sources, Adnoc last year sold its first bond and shares in its retail service-station business.
Arab oil producers in the Gulf are turning increasingly to foreign partners for new technologies and to share risks as they push into refining and chemicals. When crude plunged by half in 2014, after four years when oil prices averaged more than $100 a barrel, these countries realized they needed to develop additional sources of income.
Adnoc CEO Sultan Al Jaber last month outlined $45 billion in refining and petrochemical projects in a bid to attract foreign partners, and the company is considering as many as 10 international deals and projects. It has a refining capacity of 922,000 barrels a day, mostly at its Ruwais refining and petrochemicals complex on the Gulf coast, where it plans to build a 600,000 barrel-a-day plant.
Potential investors in Adnoc’s refining business would help run existing units and participate in building the new crude-processing facility, according to the people with knowledge. Adnoc also wants a partner to help it operate a trading business for crude and refined fuels, the people said.
BP may invest in Ruwais, CEO Bob Dudley said in a May interview in Abu Dhabi. Vienna-based OMV is also considering buying a stake in Adnoc’s refining business, people familiar with the situation said in April.
Total plans to evaluate downstream opportunities with Adnoc, its CEO Patrick Pouyanne said in an interview.
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