Abu Dhabi signs 23-year, $4B lease with Blackrock, KKR

Feb. 25 (UPI) -- The Abu Dhabi National Oil Co. has entered into a deal with institutional investors KKR and Black Rock to lease pipelines under which it will receive $4 billion up front.

The agreement forms a new company, ADNOC Oil Pipelines, in which Blackrock and KKR will have a 40 percent stake, and ADNOC the rest.

The new entity will lease ADNOC's interest in 18 pipelines, transporting crude and condensate offshore and onshore for 23 years, the company said.

ADNOC Oil Pipelines "will, in turn, receive a tariff payable by ADNOC, for its share of volume" of crude and gas flowing.

"The transaction will result in up-front proceeds of approximately $4 billion to ADNOC" and is expected to close in the third quarter.

"This transaction marks the first time that leading, global institutional investors have deployed capital into key midstream infrastructure assets of a national oil company in the Middle East," the statement said.

"In conjunction with this transaction, ADNOC is laying the groundwork for additional infrastructure-related opportunities with institutional investors," ADNOC said.

Sultan Al Jaber, UAE Minister of State and ADNOC Group CEO, said the transactions show a "smart approach (by ADNOC) to unlocking value from its portfolio of assets while retaining control over their ownership and operation."

Not only are other potential investments possible under which Abu Dhabi retains ownership and control of its assets, but it also paves the way for "foreign direct investment into the United Arab Emirates," ADNOC said.

Blackrock had $6.4 trillion in assets under management as of Sept. 30, more than that under any other investment manager, according to its website.

"We believe that today's agreement among ADNOC, BlackRock and KKR will be followed by many more such partnerships to invest in the future growth of the region," said Laurence Fink, chairman and CEO of BlackRock.