No plans for Adnoc IPO

19 April 2017

UAE sees no need to follow Aramco’s example of public offering in state-controlled firm

The UAE has no plans to follow the example of Saudi Aramco and offer shares to public in the state-controlled oil and gas firm Abu Dhabi National Oil Company (ADNOC), energy minister Suhail Mohammad al-Mazroui has said.

“Our situation in the UAE is different. Since the beginning we have foreign investors, and they are our partners and shareholders, when it comes to operating companies,” Al-Mazroui said at a conference in Dubai. “I do not think we have discussed or seen a need to IPO Adnoc.”

Saudi Arabia, the world’s top oil exporter is aiming to list less than 5 per cent of Saudi Aramco in 2018. It plans to transfer the remaining share to its investment arm Public Investment Fund (PIF), which will investment at home and abroad to generate much needed alternative revenue lines for the kingdom.

Saudi Arabia, which relies heavily on the sale of crude oil for revenues, has struggled in the wake of oil price slump from the mid-2014 peak of $115 a barrel to current $53 a barrel level. The kingdom was forced to cut spending and shelve billions of dollars worth of projects as it seeks to bridge the fiscal deficit. The country plans to partially privatise state assets, but Aramco’s IPO, slated to be the biggest ever in the world, remains at the heart of Saudi Arabia’s drive to diversify its economy.

Bankers and analysts have said that Aramco is a test case for some of the other Gulf monarchies, which are also heavily reliant on hydrocarbon revenues to fuel their economies. They will wait for the Aramco transaction to happen first, and, depending on its success, they will make a decision to part privatise their oil and gas assets. The GCC accounts for about a third of the world’s proven oil reserves. Abu Dhabi controls about 6 per cent of the total global reserves.

According to al-Mazroui, Abu Dhabi’s focus remains on integration of Adnoc’s subsidiaries for efficiency. “There is going to be a continuous engagement to cut costs and optimise. We would continue doing that,” he was quoted as saying by local press.

Adnoc is the 12th largest producer of oil globally. It currently produces about three million barrels of oil per day, and targets 3.5 million barrels a day by 2018.

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