Bloomberg reported last week that Abu Dhabi’s pension fund and holding company ADQ plans to invest $2.1 billion in the state-owned pipeline subsidiary of national oil and gas company ADNOC. This deal will enable local public sector funds to earn income from investments in local infrastructure assets alongside international investment funds such as Global Infrastructure Partners, Brookfield Asset Management Inc. as well as Singapore’s sovereign wealth fund, GIC Pte.
ADNOC was valued in June at around $20.7 billion and has raised $16 billion from partial privatisations this year. This deal is the latest development in the United Arab Emirates four- year privatisation of energy assets programme to raise finance and diversify the economy away from hydrocarbons.
Such reforms are part of ongoing efforts by all the emirates that make up the country known as United Arab Emirates. At present time, the UAE is the world’s 7th largest oil producer at 4.01 million barrels per day (BPD), which is just behind its fellow OPEC oil producer Iraq, at 4.74 million BPD reports the US-based Energy Information Agency.
However, these developments are taking place at a time of a collapse in demand for oil caused by Covid-19 as well as the increasing usage of alternative energy sources for power generation and transportation.