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UAE’s Oil Firm ADNOC Negotiates Taking Up To $5B Loan

Abu Dhabi

The Abu Dhabi National Oil Company (ADNOC), the state-held oil company of the United Arab Emirates (UAE), is in discussions to get a loan of up to US$5 billion, Reuters reported on Monday, citing banking sources, as low oil prices are forcing giant oil companies in the Middle East to tap debt markets to raise funding for expansion.  

ADNOC is talking to international and regional banks to obtain a syndicated loan worth several billions of U.S. dollars, Reuters’ sources say, with one pinpointing the loan range between US$4 billion and US$5 billion. This could be one of the options that ADNOC is mulling to raise funds—another could be the potential issue of a project bond of up to US$3 billion, according to the banking sources.

The loan, if ADNOC draws it, would be the UAE’s firm first big borrow from banks since a co-financing deal with Japanese banks for US$3.3 billion signed in January last year.

If ADNOC were to launch a project bond, it would be the firm’s first dollar bond, according to Reuters.

ADNOC has not mandated banks yet on the planned syndicated loan, but a Dubai-based banker told Reuters that the oil company may award a mandate in the next couple of weeks.

Earlier this month, reports suggested that ADNOC was studying proposals from Goldman Sachs, JPMorgan, HSBC, and First Abu Dhabi Bank to have lead roles in the potential listing of ADNOC’s distribution business, expected to raise up to US$2 billion.

Related: Why Oil Prices Aren’t Going Anywhere

A few days before that, ADNOC said that it would be expanding partnerships and possibly listing minority stakes in some of its services businesses with attractive growth and investment profiles. ADNOC, however, stressed that there are no plans for an IPO of ADNOC itself, the group holding company, which will stay wholly owned by the Government of Abu Dhabi.

As part of its new strategy to expand partnerships, ADNOC said on Sunday that it had started talks with both potential and existing partners in China and Japan over possible new partnership and co-investment opportunities, as energy demand is shifting east.

By Tsvetana Paraskova for Oilprice.com

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