Eni and Abu Dhabi National Oil Company (ADNOC), a diversified and integrated group of energy companies in the United Arab Emirates, signed a Share Purchase Agreement on Sunday which will enable Eni to acquire a 20 percent equity interest in ADNOC Refining, the Italian energy group said.
The agreed terms of the deal include a cash price of approximately $3.3 billion after deduction of the net debt and is subject to closing adjustments, which corresponds to an enterprise value of approximately $3.9 billion.
"This is one of the largest ever refinery transactions and reflects the scale, quality, and growth potential of ADNOC Refining's assets, coupled with an advantageous location from which to supply markets in Africa, Asia and Europe," Eni said.
According to the statement, ADNOC Refining operates three refineries in Ruwais (Ruwais East and Ruwais West) as well as in Abu Dhabi (Abu Dhabi Refinery), with a total refining capacity in excess of 900 thousand barrels per day.
Under the deal, which is subject to certain conditions including clearance from the U.A.E. and other regulatory authorities, Eni will contribute to the technological development of the complex.
The acquisition represents a 35 percent increase in Eni's refining capacity, and will allow the group to further strengthen its refining business by reducing its refining break-even target margin by 50 percent down to around $1.50 per barrel.
Eni also agreed on Sunday to establish a trading joint venture with ADNOC and Austrian OMV, which bought a 15 percent equity interest in ADNOC Refining, with ADNOC retaining the remaining 65 percent.
The JV will have the same equity shareholdings as the ADNOC Refining partnership, and once established, will be an international exporter of ADNOC Refining’s products, with export volumes equivalent to approximately 70 percent of throughput. ADNOC will continue to manage domestic supply within the U.A.E.
According to the press release, Eni has been present in the U.A.E.'s upstream sector since March 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.
Most recently, on Jan. 12, Eni was awarded a 70 percent interest in offshore exploration blocks 1 and 2.
By Hale Turkes