Abu Dhabi’s sovereign wealth fund, International Petroleum Investment Co., is to take control of Cia. Espanola de Petroleos SA, Spain’s second-largest oil company, by buying out shareholder Total.
The deal, worth €3.97 billion, will see IPIC buy Total’s 48.8 per cent stake and purchase the remaining Cepsa stock at €28 a share. IPIC already holds 47 per cent in the Spanish company.
Cepsa operates three refineries in Spain and has a daily oil processing capacity of 408,000 barrels. The company also owns 1,700 gas stations in Spain and Portugal, and exploration and production interests in Colombia, Peru, Algeria and Egypt.
Cepsa is also a partner in the Medgaz pipeline, which is due to commence operations within the next few weeks. The pipeline will have the capacity to export eight billion cubic metres of gas each year from Algeria to Spain.
As a result of the deal, Abu Dhabi will gain valuable processing capacity for the UAE’s 2.4 million barrels of crude oil production a day.
The deal will also benefit France’s Total, by enabling it to further its aim of reducing its exposure to European refining. Many other European oil companies are similarly keen to shed domestic assets, as European demand for oil is outstripped by that of emerging economies.
IPIC was set up by the Abu Dhabi government in 1984 with a mandate to invest in oil and gas businesses on a global scale. It made its first investment in Cepsa in 1988 and bought a further 32.5 per cent from Spanish bank Santander in 2009. The petrochemicals-focused fund currently has a total $14 billion of investments in its portfolio.
