Taqa mulls offloading foreign assets to a state entity

02 May 2016

The company has an agreement with a related party which would buy all its oil and gas assets

Abu Dhabi National Energy Company (Taqa) is considering plans to sell its oil and gas assets abroad to another Abu Dhabi state-owned entity.

The company intends to focus on its core business of power generation and water production, according to news agency Reuters, which cited sources familiar with the plans.

Taqa, which has struggled to maintain profitability, is 75 per cent owned by the Abu Dhabi government and has been scaling back overseas investments and cutting costs to cope with the slide in oil prices, which have slumped from a mid-2014 peak of more than $110 a barrel.

According to company’s 2015 annual report, the company has an agreement with a “related party” under which, at the request of Taqa, that party would buy all its oil and gas assets in North America and Atrush in Iraqi Kurdistan, plus most of its assets in Europe, at an agreed price. The report said Taqa’s oil and gas assets were valued at AED30.10bn ($8.2bn) at the end of 2015. However, the report did not specify the price of the transaction or the identity of the related party.

The company is now considering exercising that option. One of three companies – the International Petroleum Investment Company (Ipic), government-owned investment firm Mubadala Development Company, or state-controlled oil producer Abu Dhabi National Oil Company (Adnoc) – could buy Taqa’s assets, Reuters cited sources as saying.

Taqa declined to comment and Mubadala said it did not have any agreement to buy Taqa assets. Ipic and Adnoc declined to comment, according to the news agency.

Taqa made a net loss of AED1.8bn in 2015, mainly because of lower proceeds from oil and gas. The company will not pay a dividend for 2015, the third straight year it has not paid shareholders. Its total debt stood at AED74.3bn at the end of 2015.

Taqa now aims to focus on the domestic market. In November, the company said it will leverage on its overseas expertise and signed an agreement with Adnoc to develop oil and gas projects within Abu Dhabi.

 

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