Adnoc considerations include potential acquisition of certain BP holdings.

Laying Claim to BP's LNG and Gas Fields: It's the Main Attraction for ADNOC

Get a load of this, mate! The Abu Dhabi National Oil Company (ADNOC) is giving BP Plc's LNG and gas fields a proper once-over. They're considering a sneaky grab of these assets if BP decides to shed some weight or pressure from their shareholders forces them to divest more.

Sources close to the situation have spilled the beans that ADNOC has been doing some internal number-crunching, eyeing up BP's LNG and gas fields. They've even had some secret chats with bankers about the potential deal, and they're thinking about teaming up with another bidder to snag some of these prized assets, according to the insiders.

You might be wondering, why the focus on LNG and gas, and not just taking over BP entirely? Well, ADNOC's got their eyes set on the prize—these specific assets are what they're after, although taking over the whole shebang hasn't been completely ruled out. ADNOC, a dealmaking fiend in recent times, recently kicked off an international unit called XRG PJSC, which is on a gas and chemicals shopping spree with an ambitious $80 billion enterprise value in sight.

If this deal does go down, it'll likely happen through XRG. And just in case you're wondering, ADNOC might also have its eye on BP's retail fuel business, but let's not get ahead of ourselves.

ADNOC and XRG have remained tight-lipped about the matter, and it's possible they won't make a move at all. BP has declined to comment as well.

BP's been stuck in a performance rut, mainly due to their previous focus on net zero strategy. Their new CEO is trying to shake things up with a return to oil and gas, and promises to sell off assets. Other oil companies have been crunching the numbers on BP, whose market value has taken a nose dive, dropping to just below $80 billion.

BP, Not the Whole Enchilada

ADNOC's got no interest in BP's oil production assets or refineries. That means buying the whole company is a non-starter, according to the sources. The political risks associated with taking over BP lock, stock, and barrel could also scare off ADNOC.

There was a wee bit of a hiccup last year when a firm with ties to the UAE Deputy Prime Minister Sheikh Mansour bin Zayed Al Nahyan ran into trouble in their bid to buy the UK's Telegraph. But more recently, Abu Dhabi-based entities have started dipping their toes into British assets, hinting that tensions between the two might be warming up.

Another hurdle for a full-on takeover? Funding. Even cash-rich ADNOC—which can tap into billions from the debt market—would struggle with the hefty price tag.

ADNOC and BP have a long and fruitful history together. BP helped discover oil in Abu Dhabi over half a century ago, and is currently a minority shareholder in ADNOC’s largest onshore field, which produces their benchmark Murban crude. Plus, last year, BP agreed to take a 10% stake in a LNG plant under construction in the emirate, and has a joint venture with ADNOC to develop gas in Egypt and the eastern Mediterranean region.

ADNOC's unit XRG announced in May that they aim to become one of the world's top integrated gas companies over the next decade, with a massive LNG capacity boost of 25 million tons a year. Now, wouldn't that be something, wouldn't it?

Stay Up-to-Date!

Despite ADNOC's potential interest in BP's LNG and gas fields, a full takeover of BP seems unlikely due to political risks, funding challenges, and ADNOC's disinterest in oil production assets or refineries. The history between ADNOC and BP dates back half a century, with BP having a minority stake in ADNOC’s largest onshore field and a partnership in LNG production and gas development in various regions. ADNOC's recent announcement to grow its LNG capacity by 25 million tons a year indicates a focus on the gas industry, which aligns with their intent to acquire BP's LNG and gas fields. Keep an eye on the finance and industry news for updates on this potential deal.