Complex Made Simple

ADNOC awards refinery stakes to Eni, OMV in $5.8 billion deal

Why is ADNOC selling stakes in its downstream refineries? Is there more than making the UAE an investment destination?

Italy's ENI to get 20 percent of ADNOC refining unit Austria's OMV will acquire 15 percent of the unit Deal values ADNOC Refining at $19.3 billion

In one of the largest refinery deals of its kind, Abu Dhabi National Oil Company (ADNOC) agreed on equity partnerships with Italy's Eni and Austria's OMV to give them a 35 percent stake in its refining unit for $5.8 billion. ADNOC Refining, which is now valued at $19.3 billion, also agreed to a three-way trading joint venture with Eni and OMV to sell the refined products to international buyers.

Under the agreement, Eni will acquire 20 percent of the refining unit for $3.3 billion and OMV will get 15 percent for $2.5 billion.

"We commend the strategic partnerships between #ADNOC, #Eni and #OMV in refining and trading. The #UAE provides solid and reliable foundations as an international investment destination for global partners," said Sheikh Mohammed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, on his Twitter account.

Abu Dhabi's state-owned company, which accounts for much of the UAE's crude production, intends to build the world's largest integrated chemicals and refining complex by 2025 in its efforts diversify away from the sales of raw oil.

This partnership deal with Eni and OMV, therefore, underpins the company's $45 billion investment plans, announced in May 2018, which intends to triple production of petrochemicals to 14.4 million tons per year by 2025 and make it a global downstream leader. ADNOC Refining, which operates the Abu Dhabi and Ruwais refineries, currently processes a total of 922,000 barrels per day.

Read: ADNOC CEO – Global oil consumption to break 100 mbpd milestone

The new trading joint venture set up by the three companies aims to boost ADNOC's trading capabilities by exporting up to 70 percent of volumes produced by its refining unit. OMV and Eni will also acquire 15 percent and 20 percent stakes in this new joint venture, respectively. Experts say that the new venture is expected to improve integration, realize synergies, expand technological capabilities and secure greater access in key growth markets for ADNOC and its European partners.

In November 2018, ADNOC announced plans to launch an integrated gas strategy and increase oil production capacity to 4 million barrels per day (mmbpd) by the end of 2020. Part of ADNOC's strategy us to achieve gas self-sufficiency and seize incremental gas-to-chemicals growth opportunities.

These partnerships cement UAE's position as an attractive destination for international investment that could fuel the nation's growth through economic diversification.