A strategic investment

The Abu Dhabi National Oil Company (“ADNOC”), Vitol IFM and VIIT today announced a strategic investment by ADNOC in the independent global storage terminal owner and operator VTTI BV (“VTTI”).

As part of this agreement, ADNOC will acquire a 10% equity stake in VTTI. Following the transaction, VTTI will be owned 10% by ADNOC; 45% by IFM Global Infrastructure Fund (IFM GIF), an investment vehicle managed by IFM Investors; and 45% by Vitol (both directly and through Vitol Investment Partnership II Ltd, an investment vehicle sponsored and managed by Vitol).

ADNOC is one of the world’s leading oil and gas companies, producing around 3 million barrels of oil and 10.5 billion cubic feet of raw gas a day. Headquartered in Abu Dhabi, it manages over 95% of the UAE’s proven oil reserves and 92% of its gas reserves. It operates across the entire hydrocarbon value chain, from exploration, production, storage, refining and distribution, to the development of a wide range of petrochemical products.

The investment in VTTI provides ADNOC access to storage capabilities across some of its key export markets such as Asia, Africa and Europe while also securing additional facilities at the port of Fujairah, UAE, its main storage hub. Rob Nijst, CEO VTTI: “This exciting development is testament to the professionalism and dedication of our VTTI colleagues. Since VTTI was founded 13 years ago, we have worked tirelessly to build a market-leading hydrocarbon storage company, capable of delivering the highest standards of service in key strategic locations. We are very pleased to have ADNOC as our new shareholder and look forward to benefiting from their regional expertise, working together to further grow our global network of terminals and supporting ADNOC’s trading and supply ambitions.”

ADNOC’s integrated global trading platform

H.E. Dr. Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, said: “We are delighted to be entering into this strategic investment opportunity in VTTI, alongside Vitol and IFM GIF, which will further complement the development of ADNOC’s integrated global trading platform while also delivering a solid financial return. VTTI’s diverse portfolio of storage assets across key target markets such as Asia, Africa and Europe, provides us with direct access to our customers around the world, a key building block to accelerating ADNOC’s transformation into a more integrated and commercially-minded global energy player.”

He added: “As one of Fujairah’s largest storage operators, VTTI is a natural partner for ADNOC. This investment further strengthens ADNOC’s strategic position in Fujairah and supports the continued development of Fujairah as a strategic hub for our operations.”

By expanding its international storage capabilities and reach, ADNOC will move closer to its customers, allowing it to be more agile and respond quickly to market needs and dynamics. It will also unlock incremental revenue, margin and cost saving opportunities from the trading, transportation and storage of its products, giving ADNOC better control over where, when and how its products are being supplied to key markets and customers.

13 Years of experience

Rob Nijst, CEO VTTI said: “This exciting development is testament to the professionalism and dedication of our VTTI colleagues. Since VTTI was founded 13 years ago, we have worked tirelessly to build a market-leading hydrocarbon storage company, capable of delivering the highest standards of service in key strategic locations. We are very pleased to have ADNOC as our new shareholder and look forward to benefiting from their regional expertise, working together to further grow our global network of terminals and supporting ADNOC’s trading and supply ambitions.”

Further developments

Today’s announcement comes just days after ADNOC confirmed the successful closing of its refining and trading agreements with ENI and OMV, under which a new trading joint venture, ADNOC Global Trading, has been established. This will focus predominantly on the trading of products from ADNOC Refining.

In February 2019, ADNOC announced that it is building the world’s largest single underground project for oil storage, with a capacity of 42 million barrels of crude oil, in the Emirate of Fujairah on the eastern coast of the UAE. Combined with ADNOC’s existing 8 million barrels of storage in Fujairah, the ADNOC Fujairah Underground Storage Facility will strengthen the UAE’s position as a reliable supplier of crude oil as well as give ADNOC greater flexibility, allowing it to manage and optimize its delivery schedule and support its broader growth in trading. This strategic investment builds on ADNOC’s existing storage and export facilities in Fujairah and will enhance its position as one of the key trading and supply players in Fujairah’s growth as a global oil and products storage and trading hub.

Over the last two years, ADNOC has significantly expanded its strategic partnership and co-investment model and created new investment opportunities across all areas of its value chain, while, at the same time, more proactively managing its portfolio of assets and deployment of capital. This transaction further demonstrates this strategy and follows on from other recent value creation initiatives, including ADNOC’s debut capital markets transaction, the issuance of the Abu Dhabi Crude Oil Pipeline (ADCOP) bond, the IPO of ADNOC Distribution, the strategic partnerships between ADNOC Drilling and Baker Hughes, and between ADNOC, Eni and OMV in refining and trading, and the recent partnership between ADNOC Fertilizers and OCI.

VTTI will continue to be managed by an independent management team led by CEO Rob Nijst.