ADNOC Raises $2.5 Billion in Gas IPO

06.03.2023 - Abu Dhabi National Oil Co (ADNOC) has netted $2.5 billion from the initial public offering of its subsidiary ADNOC Gas. The biggest-ever issue in Abu Dhabi, topping the $2 billion Borouge listing in mid-2022, was oversubscribed more than 50 times as investors placed offers worth $124 billion for a 5% stake in the United Arab Emirates-based firm.

After increasing the size of the offering by 25% on the back of strong demand from energy- and cash-rich investors in Saudi Arabia, Abu Dhabi and Dubai, ADNOC priced the shares at $0.65 each, valuing the gas company at about $50 billion. Reports said this was about even with US energy giant Occidental Petroleum.

The newly independent firm is set to begin trading in Abu Dhabi on Mar. 13.

ADNOC had been seeking to separate its gas business as it focuses on petrochemicals and pursues new opportunities in hydrogen. The IPO benefited from a surge in natural gas prices that hit new records last year globally before coming down slightly.

Robust demand from Europe and Asia

ADNOC Gas will be in a position to profit from robust demand for liquefied natural gas (LNG) in Europe, which is struggling to recover from shortfalls related to Russia’s invasion of Ukraine and the subsequent shutdown of the Nord Stream pipeline system. Asia is also a potential major customer.

The UAE, which sits on the world’s seventh largest gas reserves, is seen to be spending billions of dollars to build up an LNG export capability of around 15 million t/y. The country currently has an estimated gas processing capacity of 10 billion cubic feet per day across eight onshore and offshore sites and a pipeline network of more than 3,250 km.

In September 2022, ADNOC signed a Letter of Intent with German energy giant RWE covering the supply of 137,000 m³ of LNG. An initial contingent was used in the commissioning of Germany’s first gas terminal late last year.

Author: Dede Williams, Freelance Journalist