UAE’s ADNOC says awards Italy’s Eni stakes in new oil concessions

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Updated 12 March 2018

UAE’s ADNOC says awards Italy’s Eni stakes in new oil concessions

DUBAI: Abu Dhabi National Oil Company (ADNOC) said on Sunday it had signed 40-year agreements with Eni , awarding the Italian company a 10 percent stake in its Umm Shaif and Nasr offshore oil concession and a 5 percent stake in Lower Zakum.
Eni has contributed a participation fee of 2.1 billion dirhams ($575 million) for the Umm Shaif and Nasr offshore concession and a fee of 1.1 billion dirhams for the Lower Zakum oil concession, ADNOC said in a statement.
The signing ceremony in Abu Dhabi was attended by Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al-Nahyan and Italian premier Paolo Gentiloni.
“The awards mark the first time an Italian energy company has been given concession rights in Abu Dhabi’s oil and gas sector,” ADNOC said in the statement.
The agreements with Eni have a term of 40 years and are backdated to March 9, 2018, ADNOC said.
“Our partnership with Eni, and other concession partners, will enable us to accelerate our growth, increase revenue and improve integration across the upstream value chain,” ADNOC Chief Executive Sultan Al-Jaber said in the statement.
Last month, a consortium led by India’s Oil and Natural Gas Corp. (ONGC), Japan’s INPEX and Spain’s Cepsa were all awarded stakes in different areas of the offshore concession.
“This is the first award by ADNOC to a major (in the offshore renewal), and shows it is looking to find a balance in its strategic partners between companies from major buyers, such as Japan and India, and IOCs (international oil companies) with technology and project delivery expertise,” said Tom Quinn, senior research analyst, Middle East Upstream, Wood Mackenzie.
The ADNOC deal also provides low-risk, long-term supply to Eni, and lays the foundation for the Italian company’s Middle East portfolio, Quinn said.
ADNOC said on Sunday it was still finalizing opportunities with potential partners for the remaining 15 percent in the Lower Zakum concession and for the remaining 30 percent stake in the Umm Shaif and Nasr concession. ADNOC will keep a 60 percent share in both concessions.
In August, ADNOC said it would split its ADMA-OPCO offshore concession into three areas — Lower Zakum, Umm Shaif and Nasr, and Sateh Al Razboot and Umm Lulu — with new terms to unlock greater value and increase opportunities for partnerships.
The existing ADMA-OPCO concession, which expired on March 8 produces around 700,000 barrels per day (bpd) of oil and is projected to have a capacity of about 1.0 million bpd by 2021.
The original shareholders in the ADMA-OPCO included BP , and Total SA.


Investment and energy experts welcome ‘sensible’ Saudi Aramco IPO valuation

Updated 32 min 16 sec ago

Investment and energy experts welcome ‘sensible’ Saudi Aramco IPO valuation

  • Price regarded as a sensible compromise and that it will sell the IPO
  • Experts said the Aramco valuation was justified by the financial metrics

DUBAI: Investment professionals and energy experts delivered a mainly enthusiastic response to the pricing of shares in Saudi Aramco and the overall valuation of the biggest oil company in the world at between $1.6 trillion and $1.7 trillion.

Al Mal Capital, a Dubai-based investment bank, said that it was positive on the Aramco initial public offering (IPO) on that kind of valuation, which it said was justified by the financial metrics.

“We believe Aramco’s IPO is a central pillar of Saudi Arabia’s Vision 2030. In our view, the broader privatization of state assets will likely accelerate the flow of foreign capital into the Kingdom, improve liquidity and transparency as well as continue to help diversify its economy away from its dependency on oil. While many investors were skeptical about the ability of Saudi Arabia to roll out its ambitious agenda, they seem to be right on track.”

Tarek Fadhallah, chief executive officer of Nomura Asset Management in the Middle East, said via Twitter: “My first impression is that the price is a sensible compromise and that it will sell the IPO. Aramco should easily raise the $8.5bn from retail investors but the 29 global coordinators, managers and financial advisers will need to find the other $17 billion. A few billion from China would help.”

Robin Mills, chief executive of the Qamar Energy consultancy, said; “I think it’s a reasonable compromise. The price is well above most independent valuations but well below the aspirational price. It implies dividend yields a bit lower than the super-majors (the independent oil companies), but a similar price earnings ratio (the measure of the share price rated according to profits). Retail and local investors should be sufficient. We’ll have to see about the foreign investors.”

Ellen Wald, energy markets consultant and author of the book Saudi, Inc., said American investor would still be undecided on the IPO. 

“Remember, investors don’t put money in because they think the value is accurate. Smart investors put money in because they think the value will rise. It all depends on whether they see signs the price will rise during their time frame.”

American oil finance expert David Hodson, managing director of BluePearl Management, said: “This valuation seems to be more reasonable based on the fundamentals. Potential investors in Western markets will base their decision on cold hard facts like dividends and growth prospects. From what we now know, Aramco is offering them a compelling investment proposition to consider.”