Eni to acquire 20% equity in ADNOC Refining for $3.3 billion after deduction of the net debt and subject to closing adjustments

Eni to acquire 20% equity in ADNOC Refining for $3.3 billion after deduction of the net debt and subject to closing adjustments

ABU DHABI, United Arab Emirates, 28-Jan-2019 — /EuropaWire/ — Eni’s acquisition of the 20 percent stake in the ADNOC Refining represents one of the largest ever refinery transactions.

The agreed price for the 20 percent stake in the refinery, being $3.3 billion, corresponds to an enterprise value of approximately $3.9 billion (Eni share). The acquisition is subject to satisfaction of a number of conditions precedent, including clearance from UAE and other regulatory authorities.

On the deal signing ceremony were present His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and Giuseppe Conte, the Italian Prime Minister.

The agreements themselves were signed by His Excellency Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, and Claudio Descalzi, Eni CEO.

His Excellency Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO: 

“We are delighted to partner with Eni and OMV in our refining business and the new trading company. Such partnerships follow our leadership’s wise guidance to unlock and drive greater value across our business. These innovative partnerships will support our ambition of becoming an international downstream leader with the flexibility to respond quickly to shifting market needs and dynamics. They will help enable our objective of unlocking even more value from every barrel of oil we produce. Working closely with our partners, we will also deliver further efficiencies across our operations and improve asset and business performance”

Eni’s CEO, Claudio Descalzi:

These agreements consolidate our strong partnership with ADNOC. In the space of less than one year, we have been able to create a business hub with world class upstream operations and a material and efficient refinery capacity with further potential growth. This transaction, which allows us to enter the United Arab Emirates’ downstream sector and represents a 35% increase in Eni’s global refining capacity, is in line with our announced strategy to make Eni’s overall portfolio more geographically diversified, more balanced along the value chain, more efficient and more resilient to cope with market volatility.”

In addition to this deal ADNOC has also sold 15% equity interest in ADNOC Refining to the Austrian OMV.  ADNOC now controls the remaining 65% in the ADNOC Refining.

Furthermore, ADNOC, Eni and OMV also agreed to establish a Trading Joint Venture with the same shareholding as of ADNOC Refining.

Eni’s refining capacity is going to increase by 35% as a result of the new deal for this high quality refinery complex.

The acquisition will allow Eni to further strengthen the resilience of its refining business by reducing the overall Eni’s refining break even target margin by 50% down to around 1,5 $/bl.

The deal makes Eni’s portfolio more integrated along the energy value chain and more resilient to the high volatile economic environment.

ADNOC Refining has a combined refining capacity in excess of 900 thousand barrel per day. It operates three refineries in Ruwais (Ruwais East and Ruwais West) as well as Abu Dhabi (Abu Dhabi Refinery).

In terms of capacity the Ruwais complex (Ruwais East and Ruwais West) ranks 4th worldwide and provides for a high conversion factor using “state-of-the art” technologies and a deep conversion process scheme. The complex has already demonstrated a resilient refining margin thanks to its competitive advantage in terms of integration, economy of scale, complexity and efficiency of the plants, proximity to the upstream fields which supply the crude and gas feedstock, and barycentric position to Eastern and Western markets. Furthermore, a development plan is already in place to further increase the flexibility of crude supply and energy efficiency.

Eni has vast experience in similar processes (such as fluidized catalytic cracking, hydrocracking, residue conversion and desulphurization, coking and others) and in the optimization activities to maximise the margin of refined barrels and will contribute to the technological development of the complex.

Once established, the trading joint venture of Eni and OMV join ADNOC will be an international exporter of ADNOC Refining’s products, with export volumes equivalent to approximately 70% of throughput. Domestic supply within the UAE will continue to be managed by ADNOC.

Eni has been present in the UAE upstream sector since 2018 when it was awarded a 10 percent interest in ADNOC’s Umm Shaif and Nasr concession and a 5 percent interest in the Lower Zakum concession, followed in November 2018 by the award of a 25 percent interest in the Ghasha Concession, ADNOC’s mega offshore gas project. On 12 January this year Eni was awarded a 70 percent interest in offshore exploration blocks 1 and 2.

In addition to the United Arab Emirates, in the Middle East Eni is also present in Oman, Bahrain, Lebanon and Iraq.

SOURCE: Eni

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