Adnoc Eyes BP's Gas Assets Amid Possible Breakup Plans

Post by : Bianca Suleiman

Photo: Reuters

Abu Dhabi's main oil company, Adnoc (Abu Dhabi National Oil Company), is thinking about buying some important parts of BP, a big British energy company. This might happen if BP decides to sell parts of its business or break into smaller pieces.

People who know about the talks said that Adnoc has quietly started looking into the idea. They have even talked to bankers to understand if a deal could work. Adnoc might team up with another company to share the assets, these people said.

Adnoc is most interested in BP's natural gas fields and LNG (liquefied natural gas) business. It does not want to buy BP completely, but it has thought about that too. Adnoc started a new international company called XRG PJSC, which is looking for gas and chemical business deals. It wants this new company to grow big — to be worth about $80 billion.

If a deal happens, XRG would probably be the one to buy the assets. Adnoc or XRG might also look into buying BP’s fuel retail business, which includes petrol stations.

Right now, nothing is confirmed. These ideas are still being talked about inside Adnoc. The company might even decide not to buy anything. When asked, XRG and BP both said they didn’t want to comment.

BP has had a tough time lately. The company focused a lot on clean energy and net-zero goals in the past, but now its CEO, Murray Auchincloss, is turning back to oil and gas. BP said it plans to sell some of its assets. Other energy companies are watching BP closely. Its value has dropped by one-third in just over a year and is now below $80 billion.

Adnoc doesn’t want BP’s oil production or refineries. That’s why it’s not interested in buying the whole company. Also, buying all of BP could be a problem politically, especially in the UK. One example is when a UAE-linked company tried to buy a UK newspaper (The Telegraph), and the British government stopped it. But now, Abu Dhabi companies have started investing in British businesses again, which may mean things are improving.

Money is another challenge. Adnoc has a lot of cash and can raise more through loans, but buying all of BP would still cost too much. Also, Adnoc doesn’t have stock that it can use to pay like other public companies do.

Adnoc and BP have worked together for many years. BP helped find oil in Abu Dhabi over 50 years ago. It also owns part of Adnoc’s biggest onshore oil field, which produces Murban crude. Last year, BP bought a 10% stake in an LNG plant being built in Abu Dhabi. Both companies are also working together on gas projects in Egypt and the eastern Mediterranean.

XRG, the new company from Adnoc, said in May that it wants to become one of the world’s top gas companies within ten years. It plans to build a large LNG business that will produce 25 million tons each year.