Abu Dhabi’s state-owned International Petroleum Investment Company (Ipic) reported a 7.7 per cent drop in operating profit for the first half of 2016 as its upstream business was impacted by lower crude prices.

The company reported a net loss of $91m due to a plunge in the value of shares it owns in Italian bank UniCredit.

Ipic, which this year announced a $125bn merger with fellow Abu Dhabi investment vehicle Mubadala Development Company, posted an operating profit of $1.43bn for the six-month period, compared with $1.55bn in the first half of 2015.

Revenues dropped 13.8 per cent year on year to $16.09bn, the company reported.

“Ipic’s downstream portfolio recorded healthy margins, while upstream assets were impacted by the lower crude price,” the company said in a statement. The average crude oil price was $39.89 a barrel in the first six months of 2016, 31.1 per cent lower than the same period last year.

Ipic said it recorded a loss of $998m from its 5.04 per cent equity in UniCredit. Shares in the bank fell nearly 62 per cent during the first half of 2016 but have since made some recovery, Ipic said.

Ipic dropped to a net loss of $91m in the first half of 2016 from a net profit of $1.25bn in the same period last year.

“Looking ahead, we are confident that our merger with Mubadala Development Company will create greater opportunities for the combined company,” said UAE Energy Minister and Ipic managing director Suhail al-Mazrouei.

“The merged entity will offer scale, geographic reach, significant operational synergies and additional sector expertise, and will further contribute to Abu Dhabi’s economic vision. We are highly optimistic for the next chapter in our development,” he added.

A joint committee will manage the merger and the two entities will operate independently until the committee completes its work.

Consolidated assets of Ipic group stood at $57.86bn as of June 30 compared with $58.04 billion on 31 December 2015, the company said

Earlier this year Ipic pulled out of a joint venture with Oman Oil Company (OOC) to build a major oil refinery in the port of Duqm, Oman.