Saudi Aramco has generated a lot of buzz in recent times, particularly with its historic drive to whip up international cash. However, one seemingly quiet giant that has raking in the foreign funds is ADNOC
Like Saudi Arabia, Abu Dhabi’s economy was hit by a dramatic fall in oil prices in mid-2014. This triggered a drive to reduce the economy’s dependence on oil, with the reformation of ADNOC and the attraction of foreign investment being a central part of the plan.
While Aramco has been able highly publicized and closely watched, ADNOC seems to have silently raised a lot of funds, with more than $19 billion over the past three years from overseas investors. This is according to Reuters’ calculations based on the publicly released size of investments, signing fees, and share sales.
ADNOC supplies nearly 3% of global oil demand and has struck deals with the world’s largest fund manager BlackRock and with U.S. investment firm KKR, a rare feat for both into national oil companies in the Middle East. ADNOC has also sold stakes in its pipeline infrastructure and refining businesses.
“Aramco is raising funds mainly by conventional borrowing while ADNOC is using more sophisticated forms of funding, including selling minority stakes in subsidiaries,” he said. “ADNOC is more open to cooperation with international partners.”
It remains to be seen which approach to attracting investment will prove more fruitful in the coming years. But at stake could be the companies’ ability to successfully diversify from crude production and, more broadly, for the domestic economies that rely on them to weather oil price shocks.
“The biggest challenge is the uncertainty in the outlook for oil and the growing international scrutiny that all energy companies are facing because of climate change,” said Helima Croft, managing director of RBC Capital Markets.
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