Muscat: The Abu Dhabi National Oil Company (Adnoc) on Monday announced a new strategic partnership with OCI. OCI is a global producer and distributor of natural gas-based fertilizers and industrial chemicals, headquartered in the Netherlands.
The partnership will see Adnoc combine its fertilizer business, Adnoc Fertilizers, into OCI’s Middle East and North Africa (Mena) nitrogen fertilizer platform to form a new joint venture (JV).
The JV will become the largest export-focused nitrogen fertilizer platform globally and the largest producer in the Mena region with a production capacity of5 million tonnes of urea and 1.5 million tonnes of sellable ammonia. Annual revenues for the combined entity are $1.74 billion, based on 2018 pro forma figures. Adnoc and OCI will own a 42 per cent and 58 per cent stake in the JV respectively.
This combination brings greater geographic diversity to the platform’s Mena production channels, enabling greater combined market access to strengthen market share and better serve its customers around the world. It will have a centralised commercial team, supported by a robust storage and distribution infrastructure with access to key ports on the Mediterranean, Red Sea and Arabian Gulf.
The JV will operate a young, state-of-the-art asset base with low maintenance costs and strong free cash flow generation. As a result, the company will be well-positioned to pay its shareholders attractive dividends and to fund future organic and inorganic growth opportunities.
This transaction continues this strategy and follows on from several 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 recent strategic equity and commercial partnerships between Adnoc Drilling and Baker Hughes as well as Adnoc Refining and Eni and OMV. (Times of Oman)