Petroleum &
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"In 2019, we managed a strong core of assets in the Petroleum & Petrochemicals portfolio that delivered superior performance, despite some market weakness."
Chief Executive Officer
Petroleum & Petrochemicals
Strategy in Action
In October 2019, Mubadala completed the sale to The Carlyle Group of a minority stake in Cepsa, Europe's largest privately-owned integrated oil and gas company. The deal valued the energy company at US $12 billion, including debt.
As a result of the transaction, The Carlyle Group now holds a
interest in Cepsa while Mubadala remains the majority shareholder with
The transaction establishes a new partnership with an enhanced management team to support Cepsa's long-term strategic goals.
Strategy in Action
In 2019, Mubadala continued to expand its portfolio of energy infrastructure assets, with new minority investments in Enagas, the Spanish gas transmission system operator with a leading global gas and LNG infrastructure portfolio spanning Europe, Latin America and North America.
Mubadala also invested
in NextDecade, the Texas-based LNG development company.
These acquisitions reflect Mubadala's strategy of increasing exposure to energy infrastructure assets that are typically characterized by long-term, stable and predictable cash flow generation, with limited direct exposure to commodity prices.
Strategy in Action
Mubadala also divested its
stake in the Medgaz pipeline, formerly held by Cepsa, to Spain's Naturgy and Algeria's Sonatrach, in a deal that valued the pipeline at €1.9 billion, including debt. The deal closed in Q2 2020.
Portfolio Highlights
At Mubadala we seek responsible investments that create long-term value, while delivering strong financial returns.
With strategic assets across the entire energy value chain, our portfolio harnesses innovation and technology to create world-leading companies.
In the downstream sector, our portfolio companies, Borealis, OMV, NOVA Chemicals and Borouge (the Borealis joint venture in the UAE), all support the transition to the circular economy in plastics, investing in both recycling and the increased recyclability of their products.
They are proactively addressing the challenge of single-use plastic products through leadership of the Stop Ocean Plastics (Project STOP) initiative and commitments to the Alliance to End Plastic Waste.
Borealis is working with Total in the US Gulf Coast to combine respective technologies, market positions, and operating experience to leverage access to competitively priced feedstock. This included the combination of existing facilities with the ongoing construction of a new ethane cracker and polyolefins plant in Texas, USA.
In 2019, Borealis broke ground on the new, world-scale propane dehydrogenation (PDH) plant located at the existing Borealis production site in Kallo, Belgium. With a targeted propylene production capacity of 750,000 metric tonnes/year (t/y), the facility will be among the biggest and most efficient plants of its kind in the world.
In 2019, NOVA Chemicals began construction of a US $2.2 billion two-part investment project.
This comprises the construction of a new SCLAIRTECH™ technology polyethylene plant (AST2), which will produce up to one billion pounds of polyethylene a year, and expanding the adjacent Corunna cracker to boost the unit's capacity by 50%, making it one of the largest in North America.
In the UAE, we play an active role in supporting the development of Abu Dhabi's downstream capabilities, particularly through the Borouge JV and, most recently, with OMV's acquisition of a 15% share in ADNOC Refining.
Portfolio Highlights
Enagas has committed to becoming a carbon neutral company by 2050 and is investing heavily in energy transition fuels and technologies.
NextDecade's supply of LNG through its proposed Rio Grande facility will bring associated gas that is currently flared from the Permian Basin to international markets. It will support the growing role of gas in the energy transition.
In the Midstream sector, our investments in Enagas and NextDecade reflect our positive outlook on the global gas market and strong commitment to the energy transition.
Portfolio Highlights
Upstream in 2019, Mubadala Petroleum focused on a number of projects that will increase the proportion of gas in its global portfolio, reflecting Mubadala's positive outlook on the global gas market and the growing role of gas in the energy transition.
The company signed a production sharing contract, in partnership with Thailand's PTTEP Energy Development Company (PTTEP ED), for its first gas project in South-East Asia's second-largest economy. Together, from early 2022, the companies will take over development and production operations for offshore Block G1/61 that contains the producing Erawan gas field.
Mubadala Petroleum also made good progress in the construction of production facilities for its operated Pegaga gas field offshore Malaysia.
In the MENA region, Mubadala Petroleum holds a 10% stake in the Zohr gas field in Egypt.
Production from the field reached the initial planned plateau rate of more than 2.7 billion cubic feet of gas per day (bcf/d), approximately five months ahead of the development plan, with a production capacity
Chief Executive Officer
Petroleum & Petrochemicals
We are facing a period of unprecedented change in the energy sector, witnessing significant advances in technology and, at the same time, a transition that will fundamentally change the global energy landscape.
In 2019, we managed a strong core of assets in the Petroleum & Petrochemicals portfolio that delivered superior performance, despite some market weakness. As well as generating strong financial returns in line with our expectations, our assets continued to operate and execute their projects efficiently and safely. They are well prepared to meet the considerable additional challenges ahead following the major disruptions since the beginning of 2020.
Our strategy is to ensure a “fit for future” energy portfolio, balanced across the value chain, that delivers value and generates returns while reflecting the transitioning energy landscape and the opportunities it presents. Implementing this strategy, we successfully closed the transaction to realize significant value from Cepsa and bring in The Carlyle Group on board as our partner in the company. In addition to accruing significant value for Mubadala, our new partner is already contributing complementary skills and knowledge that are accelerating Cepsa's further development and value creation story.
Our Midstream investment team identified a number of attractive investment opportunities, which resulted in the deployment of over AED 900 million in energy infrastructure assets, strengthening our position in a sector characterized by long-term, stable and predictable cash flow generation, with limited direct exposure to commodity prices.
Elsewhere, investment activities commenced or continued very much in line with our strategy. Expansion projects in the olefins and polyolefins space by both NOVA Chemicals and Borealis are ongoing and, primarily through Mubadala Petroleum, we continued to develop resources that are shifting the balance of our upstream production portfolio towards gas, the energy transition fuel of choice.
The start of 2020 has been extraordinarily challenging with the major disruption that COVID-19 has brought to all markets. We have worked with our assets to ensure their resilience in this difficult period while continuing to execute on a number of important transactions.
Looking further into the future, we are adjusting our strategy in response to market conditions and the energy transition. This shifting landscape will create both challenges and opportunities and, as a responsible investor, we will look to deploy capital in areas that address both the growing global demand for energy as well as the challenges of climate change and sustainability, while continuing to deliver on our mandate; create value and generate attractive financial returns for Mubadala.
