Abu Dhabi's Adnoc Is Said to Consider IPO for Shipping Business

(Bloomberg) -- Abu Dhabi National Oil Co. is considering a plan to sell shares in its shipping unit as part of a broader strategy to attract investment into the emirate that pumps most of the crude in the United Arab Emirates, according to people with knowledge of the project.

State-run Adnoc is merging three maritime transport and service businesses and will only decide on whether to sell a minority stake in the new unit through an initial public offering once that transaction is done, said the people who asked not to be identified because the proposal is confidential. The new company would have to prove its attractiveness to investors and a sale isn’t likely to go ahead before 2019, the people said.

Adnoc didn’t specifically comment on the plan for the shipping unit. In an emailed response to questions from Bloomberg, the company said it is “expanding its partnership model and creating new investment opportunities.” It said “Adnoc is therefore considering the potential IPO of minority stakes of some of its services businesses which have attractive investment and growth.” It reiterated that it won’t sell shares in the Adnoc Group holding company.

Adnoc pumps most of the crude in the U.A.E., an OPEC member with about 6 percent of global reserves. Since Chief Executive Officer Sultan Al-Jaber took over his position about a year and a half ago, the company has announced the merger of two offshore oil production ventures, brought state-linked investors from Asia into its main onshore fields for the first time and announced plans to bring partners into expanding refining, petrochemical and oil transport assets.

Merger Plans

In the merger of its shipping units, Adnoc is combining Abu Dhabi National Tanker Co., known as Adnatco, with Petroleum Services Co., known as Esnaad, and Abu Dhabi Petroleum Ports Operating Co., known as Irshad, it said last October. The joint company will operate more than 165 vessels, from natural gas carriers and oil-product tankers to tugboats and support vessels. The merger may be completed by the end of 2017, Adnoc said at the time.

Adnoc is also planning an IPO of its retail unit, Adnoc Distribution, in a transaction that could value the company at as much as $14 billion, people familiar with the matter said in July. The oil producer is also seeking funding of about $7 billion through the sale of a project bond and via a loan, three people with knowledge of the situation said last month.

With global crude prices at less than half their average in 2014, energy companies have cut investment and exploration. OPEC and other producers including Russia are cutting output to reduce a global oversupply. The U.A.E. is the fourth-largest member in the Organization of Petroleum Exporting Countries, pumping 2.92 million barrels a day last month.

IPOs in the region may be headed for a revival as countries work to make themselves less dependent on oil. Emirates Global Aluminium, the largest aluminum producer in the Middle East, is considering an IPO that could raise about $3 billion. Saudi Arabia, the largest Gulf Arab economy, has also announced plans for what could be the largest-ever IPO with the listing of Saudi Arabian Oil Co., known as Aramco.

To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net. To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net Amanda Jordan.


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