BlackRock and KKR clinch $4 billion infrastructure investment deal with ADNOC

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Investing giants BlackRock and KKR on Sunday signed a $4 billion agreement with Abu Dhabi’s National Oil Company (ADNOC) to become the first institutional investors joining forces with a national oil producer in the Middle East.

The deal represents a landmark partnership in midstream pipeline infrastructure development for ADNOC. It’s also the latest step in its drive to diversify revenue sources and bring private capital and more commercial management into the company.

The agreement forms a new entity called ADNOC Oil Pipelines, which will “lease ADNOC’s interest in 18 pipelines, transporting stabilized crude oil and condensate across ADNOC’s offshore and onshore upstream concessions,” for 23 years, according to the company’s press release Sunday.

ADNOC will retain a 60 percent majority stake, with BlackRock and KKR collectively holding a 40 percent interest in the consortium, the company said.

ADNOC CEO and UAE Minister of State Sultan Ahmed Al Jaber described the deal as an “important milestone.”

“It is part of our comprehensive integrated 2030 Smart Growth strategy which is really centered around value maximization and ensuring efficiency across the the value chain of our business,” al Jaber said after the signing.

“This deal comes at a time when we’re starting now to unfold the new approach to attracting strategic FDI (foreign direct investment) into good quality infrastructure assets that belong to ADNOC,” he told CNBC’s Hadley Gamble on Sunday.

“This type of investment class represented by BlackRock and KKR is not a typical partner for a national oil company,” al Jaber pointed out, emphasizing ADNOC’s drive to “combine the best both, being a national oil company (NOC) and an international oil company,” and demonstrating a commitment to commercial discipline as a means of attracting that kind of investment.

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