The state company announced on Thursday that after Russia’s Lukoil dropped its plans to continue with the project, Abu Dhabi National Oil Company has secured $11 billion in structured funding to monetize future production of gas in the Hail and Ghasha development.
The agreement was signed with partners Eni and PTTEP, including 20 international and local banks. It makes use of a “pre-export finance” model, supported by future gas throughput, whereby cash is given out upfront many years before the actual production, which is predicted to be completed at the end of the decade.
The acquisition marks the most recent step in ADNOC’s approach to use its balance sheet to finance a shift to an international energy giant. The company has been using a lease-leaseback agreement for infrastructural growth in the past and listed six subsidiaries in order to raise billions of dollars.
It also established XRG, a global investment arm that has grown to more than $150 billion in assets, including Germany’s Covestro.
A spokesperson of ADNOC informed Reuters that Lukoil, which increased its interest in Ghasha to 10 percent earlier this year, left the concession in November. The spokesperson reported that Lukoil transferred its stake to ADNOC after the sanctions but declined to respond to further details.
However, the shift is the result of attempts by Lukoil to sell its foreign operations, which have been crippled by American sanctions in October to pressure Russia to cease its war in Ukraine.
A source close to the deal stated, “It’s the first-ever greenfield gas-based pre-export finance,” citing that it enables ADNOC to reduce the equity investment and enhance returns.
The non-recourse financing encompasses 11 local and regional banks, seven Asian banks, and three Western lenders, such as Citi, Bank of China, and ICBC.
The source reported, adding ADNOC secured attractive rates, “It’s probably the largest participation from Chinese banks in a pre-export finance facility in the Middle East ever.”
The Chinese banks provided more than a third of the capital financing for Saudi Aramco Jafurah, which may be the largest non-U.S. shale gas project to date, targeting 2 billion standard cubic feet per day of gas by 2030.
In a statement, ADNOC CEO Sultan Al Jaber said Hail and Ghasha “is an important contributor to ADNOC’s gas strategy and is on track to generate significant value.” Thus, it is expected to produce 1.8 bcfd of gas with net-zero emissions.
