UAE approves Adnoc strategy to spend $109b


DUBAI — Abu Dhabi’s Supreme Petroleum Council (SPC) has approved the strategy of state-owned oil firm the Abu Dhabi National Oil Co (Adnoc) to spend more than 400 billion dirhams ($108.90 billion), its crown prince said on Monday.

“Adnoc will expand its portfolio through strategic international downstream investments and develop Abu Dhabi’s unconventional gas resources — cementing the UAE’s position in the global energy industry,” Crown Prince Sheikh Mohammed bin Zayed Al-Nahyan said on Twitter after the meeting of the SPC.

Adnoc has embarked on a major shake-up plan to privatize its services businesses, venture into oil trading and expand partnerships with strategic investors, its chief executive Sultan Al-Jaber told Reuters in an interview last week.

Demand for fuel and convenience among drivers will underpin what could be the UAE’s biggest IPO in a decade, according to the company’s deputy head.

Abu Dhabi’s Adnoc Distribution plans to start self-service gas stations, an option not currently available in the country, and to charge motorists who prefer having attendants fill their vehicles. With temperatures in the arid UAE typically reaching 50 degrees Celsius in the summer, the company expects more of its customers to use the gas-attendant service than in other markets.

“I see huge opportunity within the UAE,” John Carey, Adnoc Distribution’s deputy chief executive officer, said Sunday in an interview. Investing in the convenience-store business will produce “low-hanging fruit,” he said.

Abu Dhabi National Oil Co., which pumps most of the crude in the UAE, is seeking to raise as much as $2 billion from the sale of up to 20 percent of the unit. Adnoc is holding investor roadshows this week.

Governments in oil-producing countries across the Arabian Gulf are looking to sell assets to raise cash to invest in new businesses and reduce their reliance on crude exports. Adnoc plans to offer shares for a minimum of AED 2.35 (64 cents) and a maximum of AED 2.95 valuing the business at as much as $10 billion. It will announce the final price on December 8 and shares will start trading on Dec. 13.

As in several other Gulf nations, the UAE’s oil wealth and decades of government subsidies on fuel have contributed to a lifestyle built around driving. Luxury sports utility vehicles and U.S.-made muscle cars jostle on highways of as many as 14 lanes that sprawl across the desert. Motorists who obey the speed limit can hurtle between Abu Dhabi and Dubai at up to 140 kilometers per hour (87 miles per hour).

Adnoc Distribution plans to open filling stations next year in Dubai and in neighboring Saudi Arabia, where the company will seek franchise partners, Carey said. Dubai, the only UAE emirate where the company doesn’t already operate, is “under-serviced,” he said.

Abu Dhabi National Oil Co. for Distribution PJSC, as the unit is formally known, expects the market for gasoline and other fuels to grow 3 percent to 5 percent a year in the UAE, Carey said.

The potential $8 billion to $10 billion valuation Adnoc Distribution could achieve is at the lower end of a range estimated earlier this year. The company could be worth between $10 billion and $14 billion, people familiar with the matter said in July. Adnoc didn’t comment at the time on that valuation. — Agencies