IPIC, formed by the Abu Dhabi government in 1984 to invest overseas right across the oil and gas chain, is not your run of the mill investor, however. Guided by three principles - focused, cautious and disciplined - it has rarely exited from its investments. 'We try to make investments and build alliances for the long term,' said IPIC's investment evaluation adviser Gamal Harris at the Second MEED Major Abu Dhabi New Project Opportunities conference on 20 November. 'Do we have an exit strategy? Generally the answer is no as we want to deepen the relationship and pursue relevant opportunities.'

The policy has been particularly evident in IPIC's relationship with Austria's OMV. Since buying a 19.4 per cent stake in the integrated oil company in 1994, IPIC has joined OMV as a shareholder in both Borealis and AMI.

IPIC typically invests 10-50 per cent as a minority shareholder in companies, but demands board representation. 'We are not an operator, so we don't want to get involved in day-to-day management,' said Harris. However, in exceptional circumstances, IPIC will take a majority interest. This happened in June when Borealis' shareholder, Norway's Statoil, exited the petrochemical company by selling its 50 per cent stake to existing shareholders OMV and IPIC, giving the latter a 65 per cent interest.

In addition to maximising long-term shareholder value, a key part of IPIC's investment mandate is to create synergies with the Abu Dhabi oil and gas sector. South Korean refiner Hyundai Oilbank Company and Pak-Arab Refinery (Parco) provide an outlet for Abu Dhabi crude. Gulf Energy Maritime (GEM) will offer shipping opportunities. Borealis is partnering Abu Dhabi National Oil Company (ADNOC) on the Ruwais petrochemical complex, while following IPIC's acquisition in May AMI is working with ADNOC to build an 80,000-tonne-a-year (t/y) melamine plant, also at Ruwais.

Value

'The key challenge over the past 20 years has been to identify opportunities where there is value to both sides,' said Harris. 'We have evaluated many opportunities, but there have been very few where interests were aligned.'

Through its current portfolio, IPIC holds direct control or significant influence in companies which have combined revenues of more than $40,000 million. They operate seven refineries with crude distillation capacity of 1.3 million barrels a day, own a service station network of more than 6,000 sites and have oil and gas exploration agreements in 20 countries. They also have a broad geographical spread centred on Asia, the Middle East and Europe.

As its two recent deals in Borealis and AMI highlight, IPIC is on the look-out for new investment opportunities, which will meet its established investment criteria. 'We are looking to bring new partners into our portfolio and have identified several prospects,' said Harris. 'We are looking to penetrate new markets in South-East Asia, India and north America where we can capitalise on strong energy demand.' One prospective target is in Taiwan, where IPIC has looked at acquiring a 20 per cent interest in the proposed $11,600 million Kuo-Kuang petrochemicals project.

Although some change is afoot at IPIC - for the first time, it used debt financing on the recent Borealis deal - the company is not about to abandon its established principles. That goes not only for its investment objectives, but also for its