Gold­man, HSBC to help Abu Dhabi on $20B re­fin­ery

The Daily Star (Lebanon) - - BUSINESS -

Gold­man Sachs Group Inc. and HSBC Hold­ings PLC are ad­vis­ing Abu Dhabi’s govern­ment-owned oil com­pany on the pos­si­ble sale of a stake in its $20 bil­lion re­fin­ing unit, ac­cord­ing to peo­ple with knowl­edge of the mat­ter.

Abu Dhabi Na­tional Oil Co. is re­view­ing of­fers from po­ten­tial part­ners who could buy as much as 40 per­cent of its re­fin­ing busi­ness, said the peo­ple, who asked not to be iden­ti­fied be­cause the dis­cus­sions are pri­vate. A 40 per­cent stake could be val­ued at $8 bil­lion.

An Ad­noc me­dia official de­clined to com­ment on the sale but said the com­pany had re­ceived sig­nif­i­cant in­ter­est in its ef­fort to at­tract part­ners across its busi­nesses. Gold­man Sachs and HSBC de­clined to com­ment.

Ad­noc and other Mid­dle East­ern crude pro­duc­ers, in­clud­ing state com­pa­nies in Saudi Ara­bia and Kuwait, are ex­pand­ing their ca­pac­ity to process oil into re­fined fu­els and petro­chem­i­cals to boost in­come and di­ver­sify away from sales of the raw com­mod­ity.

They’re build­ing re­finer­ies at home and in the U.S. and Asia, their big­gest mar­ket for oil.

Abu Dhabi, the cap­i­tal of the United Arab Emi­rates and holder of most of the coun­try’s crude re­serves, wants Ad­noc to squeeze more profit from the emi­rate’s hy­dro­car­bon wealth to un­der­pin eco­nomic growth. To tap new fund­ing sources, Ad­noc last year sold its first bond and shares in its re­tail ser­vices­ta­tion busi­ness.

Arab oil pro­duc­ers in the Gulf are turn­ing in­creas­ingly to for­eign part­ners for new tech­nolo­gies and to share risks as they push into re­fin­ing and chem­i­cals. When crude plunged by half in 2014, af­ter four years when oil prices av­er­aged more than $100 a bar­rel, these coun­tries re­al­ized they needed to de­velop ad­di­tional sources of in­come.

Ad­noc Chief Ex­ec­u­tive Of­fi­cer Sul­tan al-Jaber last month out­lined $45 bil­lion in re­fin­ing and petro­chem­i­cal projects in a bid to at­tract for­eign part­ners, and the com­pany is con­sid­er­ing as many as 10 in­ter­na­tional deals and projects. It has a re­fin­ing ca­pac­ity of 922,000 bar­rels a day, mostly at its Ruwais re­fin­ing and petro­chem­i­cals com­plex on the Gulf coast, where it plans to build a 600,000 bar­rel-a-day plant.

Po­ten­tial in­vestors in Ad­noc’s re­fin­ing busi­ness would help run ex­ist­ing units and par­tic­i­pate in build­ing the new crude-pro­cess­ing fa­cil­ity, ac­cord­ing to the peo­ple with knowl­edge. Ad­noc also wants a part­ner to help it op­er­ate a trad­ing busi­ness for crude and re­fined fu­els, the peo­ple said.

The com­pany said in April it was start­ing the trad­ing unit, and it hired for­mer HSBC banker and To­tal SA oil trader Philippe Khoury to man­age the busi­ness.

BP PLC may in­vest in Ruwais, CEO Bob Dudley said in a May in­ter­view in Abu Dhabi. Vi­ennabased OMV AG is also con­sid­er­ing buy­ing a stake in Ad­noc’s re­fin­ing busi­ness, peo­ple fa­mil­iar with the sit­u­a­tion said in April. To­tal plans to eval­u­ate down­stream op­por­tu­ni­ties with Ad­noc, its CEO Pa­trick Pouyanne said in an in­ter­view with Abu Dhabi’s The Na­tional news­pa­per in March. – Bloomberg News

Arab oil pro­duc­ers in the Gulf are turn­ing in­creas­ingly to for­eign part­ners for new tech­nolo­gies.

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