Abu Dhabi Fund Buys Back Stake in ADNOC Oil Pipelines

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Abu Dhabi Fund Buys Back Stake in ADNOC Oil Pipelines

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A long view of Abu Dhabi, United Arab Emirates (© Shutterstock/Riyaskkl)
A long view of Abu Dhabi, United Arab Emirates (© Shutterstock/Riyaskkl)

Abu Dhabi has flipped its own script of offloading minority stakes in subsidiaries of the Abu Dhabi National Oil Company (ADNOC) to acquire a huge stake in oil pipelines.

As reported by Reuters on Friday, April 5, Abu Dhabi investment firm Lunate has acquired a 40% stake in the entity that leases the Abu Dhabi National Oil Company's (ADNOC) oil pipelines in a move that departs from its recent strategy of selling minority stakes in state-owned oil assets. 

The terms of the deal, announced on Wednesday, April 3, were not disclosed. With ADNOC Oil Pipelines holding a 23-year lease on ADNOC's ownership interests in 22 pipelines, covering an 806-kilometer network, the transaction brings back a stake previously held by foreign investors under domestic control. 

BlackRock and KKR, two U.S. private equity firms, had purchased the 40% stake in 2019 for $4 billion, encompassing a 750-kilometer network of 18 pipelines.

Lunate, with $105 billion in assets under management, is part of a business empire linked to Sheikh Tahnoon bin Zayed Al Nahyan, the United Arab Emirates' national security advisor and brother of UAE President Sheikh Mohammed bin Zayed Al Nahyan.

Analysts expressed mixed interpretations of the deal, with some seeing it as a commercially sound acquisition given the expanded pipeline network while others questioned whether it aligns with the UAE's long-term push to attract foreign direct investment.

The move comes as neighboring Saudi Arabia aims to significantly increase annual foreign investment inflows by 2030. Lunate's purchase also coincides with a broader global trend of some countries reasserting control over strategic domestic assets, particularly in the energy sector.

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