Abu Dhabi to Sell 4% of Natural-Gas Business in IPO

Adnoc Gas was formed earlier this year after Adnoc combined its liquefied-natural gas and gas-processing arms as part of a push to boost output and trading of liquefied natural gas. Abu Dhabi recently delivered its first shipment of LNG to Germany, as Europe increasingly turns to the Middle East after shunning its main supplier of gas, Russia, over the invasion of Ukraine.

Over the long term, Abu Dhabi sees natural gas as an important part of the future energy mix with renewables and nuclear.

“Natural gas is central to the energy transition,” said Khaled Al Zaabi, acting group chief financial officer of Adnoc. 

If the IPO raises more than $2 billion as hoped, it could be the biggest on record in Abu Dhabi, according to people familiar with the matter. After the offering, Adnoc will own about 91% of the shares, while Abu Dhabi National Energy Co., or Taqa, will own approximately 5%.

The IPO is the latest in a recent wave of mega listings across the Gulf region, led by Saudi Arabia and the U.A.E. Both countries are actively banking on high energy prices to take state-owned companies public, raising cash that would also help diversify their energy-dependent economies.

Adnoc has already listed a number of its subsidiaries over the past couple of years including its petrochemicals company Borouge and Adnoc Drilling. Borouge raised more than $2 billion in an IPO last year. 

Adnoc Gas on its website said it has access to 95% of the U.A.E.’s natural gas reserves, which is estimated to be the seventh largest natural gas reserves globally. Adnoc Gas expects to pay dividends of $3.25 billion for 2023. 

With the West largely avoiding Russian oil and gas in the wake of sanctions imposed on Moscow over its invasion of Ukraine, Middle East petrostates now have a new market in Europe after years of focusing on sales to Asia. Abu Dhabi sees Europe as a market of the future because of shifting geopolitics and its move to replace all Russian energy imports by as early as mid-2024.

Earlier this week Adnoc made the first LNG delivery from the Middle East to Germany. Adnoc is also in talks to buy commodity trading house Gunvor Group Ltd., according to people familiar with the talks, a deal that would create one of the world’s largest traders of oil-and-gas products.

Adnoc, which last year announced the discovery of up to 2 trillion standard cubic feet of gas offshore, plans to build a 9.6 million metric ton a year LNG plant in the eastern U.A.E. emirate of Fujairah. The facility will raise Adnoc’s LNG production capacity to 15.6 million metric tons a year by 2028, making it a potential rival to neighboring Qatar—one of the world’s largest LNG exporters.

After the war in Ukraine broke out, Qatar emerged as one of Europe’s best hopes for weaning itself off Russian natural gas. Germany, France, Belgium and Italy have been in talks with Qatar to buy LNG on a long-term basis. The Gulf state is in the midst of a multibillion-dollar plan to boost its gas production capacity by 40% by 2026 to 110 million metric tons per annum. 

Write to Summer Said at [email protected]

Adnoc Gas was formed earlier this year after Adnoc combined its liquefied-natural gas and gas-processing arms as part of a push to boost output and trading of liquefied natural gas. Abu Dhabi recently delivered its first shipment of LNG to Germany, as Europe increasingly turns to the Middle East after shunning its main supplier of gas, Russia, over the invasion of Ukraine.

Over the long term, Abu Dhabi sees natural gas as an important part of the future energy mix with renewables and nuclear.

“Natural gas is central to the energy transition,” said Khaled Al Zaabi, acting group chief financial officer of Adnoc. 

If the IPO raises more than $2 billion as hoped, it could be the biggest on record in Abu Dhabi, according to people familiar with the matter. After the offering, Adnoc will own about 91% of the shares, while Abu Dhabi National Energy Co., or Taqa, will own approximately 5%.

The IPO is the latest in a recent wave of mega listings across the Gulf region, led by Saudi Arabia and the U.A.E. Both countries are actively banking on high energy prices to take state-owned companies public, raising cash that would also help diversify their energy-dependent economies.

Adnoc has already listed a number of its subsidiaries over the past couple of years including its petrochemicals company Borouge and Adnoc Drilling. Borouge raised more than $2 billion in an IPO last year. 

Adnoc Gas on its website said it has access to 95% of the U.A.E.’s natural gas reserves, which is estimated to be the seventh largest natural gas reserves globally. Adnoc Gas expects to pay dividends of $3.25 billion for 2023. 

With the West largely avoiding Russian oil and gas in the wake of sanctions imposed on Moscow over its invasion of Ukraine, Middle East petrostates now have a new market in Europe after years of focusing on sales to Asia. Abu Dhabi sees Europe as a market of the future because of shifting geopolitics and its move to replace all Russian energy imports by as early as mid-2024.

Earlier this week Adnoc made the first LNG delivery from the Middle East to Germany. Adnoc is also in talks to buy commodity trading house Gunvor Group Ltd., according to people familiar with the talks, a deal that would create one of the world’s largest traders of oil-and-gas products.

Adnoc, which last year announced the discovery of up to 2 trillion standard cubic feet of gas offshore, plans to build a 9.6 million metric ton a year LNG plant in the eastern U.A.E. emirate of Fujairah. The facility will raise Adnoc’s LNG production capacity to 15.6 million metric tons a year by 2028, making it a potential rival to neighboring Qatar—one of the world’s largest LNG exporters.

After the war in Ukraine broke out, Qatar emerged as one of Europe’s best hopes for weaning itself off Russian natural gas. Germany, France, Belgium and Italy have been in talks with Qatar to buy LNG on a long-term basis. The Gulf state is in the midst of a multibillion-dollar plan to boost its gas production capacity by 40% by 2026 to 110 million metric tons per annum. 

Write to Summer Said at [email protected]