State & Corporate Crime

The CARLYLE-MUBADALA ALLIANCE: A new blueprint for oil & gas bribery

I would argue in this article that the overvalued and questionable purchase of Abu Dhabi’s Mubadala owned CEPSA by the Carlyle group in 2019 was part of a USA-CHINA-UK government-sponsored bribery operation connected to the transfer of large Oil & Gas concessions in the United Arab Emirates (UAE) into the hands of Chinese National Oil Companies and other oil companies based in countries that collaborated with the 1MDB operation and that happen to be main recipients of UAE crude oil exports: UK, Japan, South Korea, Spain, Thailand,… The timing of the 1MDB operation and specifically the purchase of Coastal Energy by Abu-Dhabi-owned CEPSA and the 1MDB Chinese middleman Jho Low was chosen to coincide exactly with the historic expiration of the 75 years old Abu-Dhabi oil concessions. SHELL OIL and the Chinese National Oil companies CNPC and CNOOC signed global alliance agreements immediately after the UAE Oil concessions transfers. Those agreements were signed in Beijing and in London in the presence of the Chinese Premier and the British Prime Minister. The so-called Malaysian-1`MDB scandal is in fact not a financial scandal but a complex government cover-up operation designed to deviate attention from the main objectives of the intelligence operation which were: 1) Aiding Mohammed Bin Salman’s power consolidation with the implementation of the 2017 corruption coup (i.e. Saudi Arabian Purge) through the Petrosaudi-1MDB scandal, that neutralized MBS rivals to the Saudi crown and 2) “Facilitating” the transfer of the UAE oil concessions through a financially complex bribery operation involving Shell Oil, the Carlyle Group, Mubadala, CEPSA and Oscar Wyatt’s Coastal Energy Resources, which is described in this article.

Carlyle’s Overpriced Acquisition of 1MDB scandal connected CEPSA

Carlyle announced the intention to purchase part of Abu-Dhabi-owned Spanish oil company CEPSA on April 8th, 2019 [1]. The transaction, which was subject to customary regulatory approvals, was completed on October 15th, 2019 [2-3]. After the acquisition, the head of Carlyle’s Energy Division, dutch master deal maker Marcel Van Poecke, became Vice-Chairman of CEPSA and Philippe Boisseau, who is also on the board of other Carlyle Energy assets, became CEPSA’s new CEO. 

Marcel Van Poecke, had announced in 2018 [4] the creation of a new US$4 billion fund to which he contributed $100 mln of his own money with the intention of investing in oil and gas assets outside North America, aiming to fill a gap left by international energy companies that were keeping a tight grip on their purse strings.

CEPSA had become a part of Mubadala’s portfolio after Mubadala absorbed Abu Dhabi’s 3rd sovereign wealth fund (SWF) International Petroleum Investment Corporation (IPIC) in January 2017 [5]. Khadeem Al-Qubaisi, IPIC, and CEPSA CEO at the time was directly involved in the 1MDB operation [6] and was named in several US DOJ cases together with his co-conspirator Jho Low [7]. Al-Qubaisi was arrested by Abu-Dhabi authorities in August 2016 [8] and sentenced to 10 years in prison in June 2019 [9-10]. Al-Qubaisi claimed that he was being made a “scapegoat” for the UAE’s role in the 1MDB operation. Al-qubaisi was in fact merely a frontman and all the deals he made were on behalf of the Abu-Dhabi’s Al-Nahyan ruling family. Al-Qubaisi was formerly a top aide to Sheikh Mansour Zayed Al Nahyan, who is well known as the owner of Manchester City football club. Sheikh Mansour who is the UAE deputy prime minister and younger brother of the UAE crown prince, Mohammed bin Zayed bin Sultan Al Nahyan, was also a member of the board of IPIC before the merger with Mubadala.

The DOJ did not prosecute Khadeem Al-Qubaisi nor requested his extradition probably because prosecuting him would expose Sheikh Mansour and the UAE ambassador in the USA, Yousef Al Otaiba. Companies connected to ambassador Otaiba received $66 mln allegedly misappropriated from the 1MDB fund [11]. Furthermore, close to US$140 million that originated in 1MDB is believed to have been used to pay for the super-yacht Topaz [9], which was built in 2012 for Sheikh Mansour. Both of them have diplomatic immunity but even if that was not the case prosecuting these two individuals would be impossible without endangering the hundreds of billions that the UAE has invested in the USA through its SWFs in the last 20 years [12].

Mubadala attempted unsuccessfully to revive CEPSA public listing since the IPIC merger. Finally, in October 2018 Mubadala announced that it was not proceeding with its IPO and listing of CEPSA shares due to adverse market conditions. The negative outlook for the O&G business two years ago together with CEPSA’s involvement in the 1MDB scandal makes even more puzzling Carlyle’s decision to go ahead and purchase part of CEPSA. In a live interview with CNBC on April 8th, 2019[13] Van Poecke struggled to justify the logic behind Carlyle’s acquisition of 37% of CEPSA for $4.9 billion when questioned about the failed IPO and the multiyear downturn in the O&G business. The negative forecasts for the Oil & Gas business at the time have been confirmed as can be clearly observed in this Figure comparing an Oil &Gas ETF index with the S&P 500.

Carlyle’s co-CEO resignation

Let us fast forward one year after Carlyle’s purchase of CEPSA. On July 21st, 2020, the Carlyle Group co-CEO Glenn Youngkin resigned after less than three years at the helm, handing sole control of the private equity (PE) giant to Kewsong Lee [14]. According to Carlyle’s press release, Glenn Youngkin resigned to dedicate himself to public service activities to which he was already committed [15]. The ascent of two co-CEOs simultaneously in early 2018 constituted an experiment in the world of PE and an attempt to pass full operational control from Carlyle Group founders. The dual co-CEO structure was plagued with internal tensions since day one and the co-CEO structure was not seen by many as a permanent solution. Some analysts pointed out that the 2020 1Q reported net loss of $709 mln, compared with the 2019 446.3 mln net profit for the same period is what triggered the resignation [16].

I believe that the reason for the sudden resignation of co-CEO Glenn Youngkin may lie somewhere else, which is most likely in the potential liabilities of the connection between Carlyle’s overpriced acquisition of 37% of CEPSA and the 1MDB scandal.

The Goldman Sachs 1MDB-Malaysia Settlement

Three days after Glenn Youngkin’s resignation, on July 24th, 2020, the lawyers representing Goldman-Sachs before the government of Malaysia reached a settlement relating to the bank’s role in the 1MDB scandal, which was known to have involved Abu Dhabi’s SWF IPIC [17]. As we mentioned earlier, IPIC was absorbed by Carlyle’s long-time strategic partner the Abu Dhabi’s based Mubadala SWF in January 2017 [5]. It is curious, to say the least, that on July 28th, 2020, just 4 days after Goldman Sachs reached a settlement with the government of Malaysia former Malaysian prime minister, Najib Razak, was sentenced to 12 years in prison and fines of nearly $50 mln on charges of abuse of power, breach of trust and money laundering [18] in relation to the 1MDB case. Did the Goldman Sachs lawyers know that the Malaysian ex-PM was going to be convicted and rushed to reach a deal 4 days before? on February 15th, 2021 A Malaysian court will begin hearing an appeal by Najib Razak against his conviction. With the recent change of government in Malaysia, that has allowed Najib’s party to come back to power bypassing the electoral process, Najib would not only be allowed to keep the more than US$600 mln gift he received from the King of Saudi Arabia but he probably will not spend any time behind bars.

The Goldman Sachs 1MDB-DOJ Settlement

Three months after Goldman Sachs reached a settlement with the government of Malaysia, On October 22nd, 2020, the US DOJ shocked the world of finance with the largest penalty ever levied against a US company for violating the FCPA [19]. Goldman Sachs will pay $2.9 billion to the DOJ and regulators in the UK, Singapore, and Hong Kong as part of the settlement. Goldman Sachs admitted to “participating in a sweeping international corruption scheme, conspiring to pay more than $1.6 billion in bribes, directly and indirectly, to multiple high-level government officials in Abu Dhabi, Malaysia, and other countries so that the company could reap hundreds of millions of dollars in fees. This settlement with the US DOJ complements the settlement that Goldman Sachs had reached with the government of Malaysia three months earlier [17]. Goldman Sachs agreed to a $3.9 billion deal with the Malaysian government to settle claims relating to the bank’s role in the 1MDB scandal. The Wall Street bank will pay the Malaysian government only $2.5 billion but will also provide a guarantee that it also receives at least $1.4 billion in proceeds from assets related to 1MDB that had already been seized by governmental authorities around the world.

The settlements can be considered a legal victory for Goldman-Sachs tough for two reasons: 1) the Malaysian government was asking originally for US$7.5 billion from Goldman Sachs to settle the case [20] and 2) the criminal charges against Goldman-Sachs executives were dismissed. The shameless current and former Goldman Sachs CEOs, David Solomon [21] Llyod Blankfein and Gary Cohn, continue blaming [22] the scandal on the only two bankers (coincidentally non-American born) who were criminally charged by the DOJ, Tim Leissner and Roger Ng [23-24]. It is absurd and insulting to think that anyone can believe that a bribery scheme of this magnitude could take place without approval from higher management in Goldman Sachs. 

The CEPSA-Coastal-1MDB Reserves Fraud and the Carlyle-CEPSA deal

In February 2011 UAE’s SWF IPIC, that as mentioned previously would be absorbed by UAE’s Mubadala SWF in January 2017, acquired full ownership of Spanish oil company CEPSA paying US$5.37 billion dollars for the 53% of the company that did not already own [25-26]. Two years later, on November 13th, 2013, CEPSA announced a sensational US$2,200 mln deal to purchase Houston’s based Coastal Energy Resources [27-28]. The deal was completed on January 17th, 2014 [29] after receiving approval from the Spanish regulators [30] as well as from CEPSA and Coastal’s shareholders. Goldman Sachs International and PwC acted as financial advisors to CEPSA and SRG [30]. CEPSA and Jho Low created a partnership, SRG, based in the BVI for this purpose in early January 2014 [31]. According to the DOJ court Case 2:17-CV-04438, Jho Low invested US$50 mln in the partnership that was traceable to the 1MDB fund [31] and CEPSA purchased Jho Low’s share for US$300 just one week after closing the deal (a 500% return in one week). 

In a previous Linkedin article [32] I performed an analysis of Coastal Energy production data and reserves between 2008 and 2018 using publicly available Annual Reports from the Thailand Department of Mineral Fuels (TDMF) [33]. I was able to show that around 45 million barrels of Coastal’s proved reserves were fictitious, or in other words, were fabricated in order to inflate the value of Coastal before the purchase by CEPSA. According to the TDMF Annual Reports, Coastal Energy Resources (CEC International in the TDMF Reports) declared before the sale to CEPSA 66 MMbbl (million barrels) in proved reserves. Surprisingly by the end of 2014, less than one year after the sale, Coastal now under full CEPSA ownership declared to the Thai DMF proved reserves of only 17 MMbbl (Million barrels). Since the cumulative production for the year 2014 was only 5 million barrels this implies that nearly 45 million barrels in proved reserves disappeared into thin air (see Figure below). At $50 per barrel, this unaccounted decline in reserves amounts to the entire valuation of Coastal at the time of the CEPSA purchase [32]. 

IPIC had valued CEPSA in early 2011 at approximately US $10.2 billion dollars [25-26]. If we adjust for inflation this 2011 valuation translates to $11.9 billion in 2019 dollars. If we add to the US$2200 January 2014 CEPSA purchase price the US$250 million in middleman fees paid to Jho Low after the acquisition of Coastal plus the operating losses between 2014 and 2019, plus the US$60 mln in decommissioning costs of the Songkhla oilfield two wellhead platforms and their connection bridge in the Gulf of Thailand’s [34] we conclude that CEPSA lost by our estimations at least US$3,000 mln with the Coastal deal. This should have been an absolute disaster for a company like CEPSA valued at US$10.2 billion in 2011. Taking this into consideration the CEPSA valuation in 2019 should have been at most around $9 billion US dollars. 

Amazingly, on April 9th, 2019, only one day after CEPSA owned Coastal announced the decommissioning of its offshore platforms in Thailand [34] (an implicit admission that its main asset was worthless) the Carlyle Group announced the acquisition of a 37% stake in CEPSA for the US $4.9 billion, which implies that Carlyle valued CEPSA at the astounding US $12.9 billion [35], a US$4 billion gift to Mubadala that apparently defies comprehension.

These facts clearly demonstrate that Carlyle’s purchase of 37% of CEPSA for US$4.9 billion does not make any sense from a financial point of view. How on Earth can Carlyle justify to its investors such an overvalued purchase at the worst time the Oil & Gas business has seen in decades? From what point of view is it a good idea for a PE firm to purchase a company whose management and ownership are deeply involved in the largest financial scandal in recent history involving multiple open court cases in the USA, Singapore, Malaysia, UK, and Switzerland?  

  The Mubadala-Carlyle Rocky Strategic Partnership

In order to start making sense of the Carlyle’s CEPSA acquisition, one has to take a closer look at the more than 10 years long and rocky history of the strategic partnership between the Carlyle Group and the UAE. 

The Carlyle Group sold a 7.5% share to the government of Abu Dhabi on September 20th, 2007 for $1.35 billion. The price represented a 10 percent discount to a mutually agreed valuation for Carlyle of $20 billion (Goldman Sachs advised Mubadala on the transaction) [36]. The deal included value-related protective rights, which protected the company if the value of its investment fell below $20 billion [37]. Carlyle had already long ties to the region, where it had been one of the original fund-raisers and it was in the midst of setting up a new fund. That was the second time the Washington firm allowed an outsider to buy into his highly profitable partnership. Carlyle had sold a 5.5% stake to CALPERS (California Public Employee’s Retirement System) in February 2001 for $175 mln, which had valued Carlyle at US$3.5 billion in 2001 [38]. CALPERS had already a long relationship with Carlyle before buying a stake in 2001. CALPERS had U$475 mln managed by Carlyle and also owned the office building where Carlyle’s headquarters are located [39].

In December 2010 the Carlyle Group borrowed $500 million from the Abu Dhabi government. Carlyle then turned around and gave $400 million of it in dividends to the firm’s 100-plus partners, who did not pay taxes on the windfall until a later date. As part of the December 2010 loan, Mubadala increased its ownership in Carlyle to more than 9 percent [40]. The liquidity event allowed the Carlyle partners to extract more money from the firm, before the IPO. The Carlyle Group had about $150 billion in assets under its control in 2012. Without any doubt, Abu-Dhabi SWF money had contributed to turning the three Carlyle founders into some of the richest people in the USA. Forbes magazine ranked its worth in an estimated $2.7 billion each in 2011.

The Carlyle Group attempted to force a mandatory arbitration clause and class action ban in its IPO filing documents in January 2012. The provisions would have denied its shareholders the right to hold the company accountable in court. The Carlyle Group decided to reverse course and remove the proposed clause when it faced opposition from the SEC and members of Congress [41]. 

The Carlyle Group was eyeing a market valuation of $7.5 billion to $8 billion in an initial public offering [42]. The Private equity firm proved a tough sell with investors in May 2012, raising only $671 million in an IPO that was slightly below a pricing range already seen as modest [43]. In order to convince investors to buy the Carlyle IPO, the stock had been priced at a discount to the stocks of some of the other investment shops. All the IPO proceeds were basically used to pay off debt. In order to pull this off one of its major outside investors, the Mubadala Development Company became the big loser in the IPO. Mubadala’s equity stake was worth about half of what the Abu Dhabi firm originally paid for its stake [44], an amount that Mubadala would have to write off in its 2012 financial statements [45]. 

Carlyle – Shell Oil ties run deep  

The last piece of the puzzle that would help us to understand the rationale for Carlyle’s CEPSA acquisition and the connection to the 1MDB operation are the strong ties between Carlyle energy investments and Shell Oil during the last two decades.

Petroplus now defunct was first formed in 1993 by dutch businessman Marcel Van Poecke and became the largest European independent oil refiner before its bankruptcy in 2012. The first Petroplus large acquisition was completed in 2000. It was the acquisition of Shell’s Cressier refinery and associated assets in Switzerland. Private equity firms Carlyle and Riverstone Holdings acquired Petroplus and delisted the company from the Amsterdam Stock Exchange in 2005. Petroplus rode a bull run of high-profit margins on the roughly five years to the first half of 2008 that marked a golden age of refining. Marcel van Poecke, co-founder and then co-CEO of the company, resigned in 2006. Petroplus was listed again in 2007 but this time on the Swiss exchange not on the Amsterdam stock exchange, raising $2.4 billion and making big profits for Carlyle and Riverstone [46].

In 2007 Rob Routs, Shell’s executive director for oil products and chemicals announced Shell’s intention to cease refining in France following a new group strategy of “more upstream, profitable downstream” [47]. Shell sold its refineries to Petroplus and to plastic producer Basell. Basell was formed originally in the year 2000 as a 50/50 joint venture between BASF and Shell. Later that same year Basell and Lyondell merged to become LyondellBasell Industries, which based in Houston and Rotterdam is one of the largest refining, chemical, and plastics companies in the world [48].

At the end of 2007, after Carlyle cashed out, Petroplus’s financial debt stood at $1.33 billion, compared with the zero that had been reported at the end of 2006. After 2007 Petroplus refining margins dived, its lenders froze credit to the company in 2011, the company was delisted in 2012 and crumbled in a mountain of debt that became impossible to manage. In retrospect, one can see that Petroplus was a vehicle that allowed Carlyle to profit greatly from the few years of high-profit margins in the refining business but most importantly it was a vehicle created to allow Shell Oil to divest its European refineries just before the economic collapse of 2008.

After resigning from Petroplus Marcel Van Poecke created AtlasInvest in 2007. AtlasInvest in a joint venture with raw materials trader Vitol (75%/25%) created Varo Energy in 2012 in order to acquire the Swiss refinery Cressier from the insolvent Petroplus, that Van Poecke had previously managed. In 2013 AtlasInvest sold its shareholding in Varo Energy to Carlyle while Vitol reduced its stake to enable each party to own 50%. Today AtlasInvest through its partnership with the Carlyle Group manages the Carlyle International Energy Partners funds. These Carlyle Group funds manage more than $7bn of assets and invest in conventional energy businesses globally (outside of North America).

In 2015 Shell signed an agreement to sell its 75% stake in Tongyi Lubricants to Huo’s Group and The Carlyle Group [50]. Shell had acquired a 75% stake in Tongyi Lubricants from Huo’s Group in 2006 and became the number one international lubricants supplier in China by share of supply, a position it still holds.

In 2017 Carlyle-backed Assala Energy, a new oil and gas exploration and production (E&P) company focused on energy opportunities in Sub-Saharan Africa, announced the acquisition of Shell’s onshore assets in Gabon, Africa, for $587 million. The company’s management team included successful, Africa-experienced E&P professionals, many of whom have worked in Gabon previously[51].

In 2018 The Carlyle Group acquired EnerMech Group Ltd, an international services company that provided critical asset support to the energy, infrastructure, and industrials sectors [52]. Enermech had scored the previous year a contract to work on Shell’s giant PRELUDE Floating LNG project offshore Australia [53].

In 2018 Carlyle acquired Neptune Energy, a large global E&P business with operations in Europe and interests in large development projects in Indonesia and Algeria, small producing assets in Egypt, and material resource opportunities in Azerbaijan and Australia [54]. Neptune Energy in Norway has ownership in seven producing fields. Neptune Energy Norway managing director was previously in charge of Shell’s Norway operated assets portfolio[55]. Neptune and Shell are also partners in Shell’s operated field Alam El Shawish West in Egypt [56]. Currently, Carlyle and a consortium backed by Cairn Energy are among the bidders for Royal Dutch Shell’s onshore Egyptian oil and gas assets [57]. The process, which was expected to be completed in May, was slowed by the coronavirus pandemic, which limited travel and led to a collapse in oil and gas prices.

 Beyond Carlyle Marcel Van Poecke is also the chairman of dutch based ONE-Dyas (the largest privately owned Dutch exploration and production company). ONE-Dyas acquired UK operated SEAN assets from Shell in 2011 [58]. ONE-Dyas also partners with Shell Norway in several offshore Norwegian fields [59].

The ties between the Carlyle Group and Shell oil extend way beyond energy deals. Shell Oil has also been a source of talent for Carlyle. In 2007 Carlyle acquired Spanish-based Applus+ for US$2 billion, a company specialized in industrial safety testing and certification, which is currently headquartered in Barcelona (Spain). This was the largest investment undertaken by a private equity firm in Spain at the time [60]. John Hofmeister, who was president of Shell Oil US between 2005 and 2008 and current member of the prestigious US Energy Security Council [61-63], was hired in 2013 as a Non-executive Director of the Applus+ board to help drive Applus+ expansion in North America. Hofmeister is currently Chairman of the Appointments and Remunerations Committee [64]. 

Marcel Van Poecke is also chairman of dutch based Mazarine Energy since 2016 after Carlyle acquired part of the company. Mazarine is a privately owned E&P company with assets in Romania and Tunisia, which counts with Royal Dutch Shell ex-CEO, Jeroen Van der Veer, as one of its senior advisors [65]. 

 In 2019 Ben van Beurden, Chief Executive Officer of Royal Dutch Shell was the recipient of the Executive of the Year Award, which is the international energy industry’s most prestigious accolade. This award is administered by Houston-London based the Energy Intelligence Group [66]. Not surprisingly Marcel Van Poecke is the Vice-chairman of the Energy Intelligence Group, a leading provider of news and analysis in the Energy Industry [67]. 

SHELL-CNPC UAE Oil Concessions and the 1MDB Operation

There are a good number of high profile Carlyle energy investments connected in one way or another to Shell Oil. One may wonder if there is any connection between Carlyle’s purchase of CEPSA and any Shell Oil asset or transaction.

On January 8th, 2014, The National, a private English-language daily newspaper based in Abu Dhabi published an article titled “The End of An Incredible Oil Powered Era” [68]. The article reminded us that the original concession deal for Abu Dhabi’s oilfields was expiring on Friday, January 10th, 2014. Signed in 1939, the concession heralded a new dawn for the emirate and helped to fuel the formation of the UAE. January 10th 2014 marked the expiry of the 75-year concession that covered the oilfields run by the Abu Dhabi Company for Onshore Oil Operations (Adco). The company would continue to operate, but for the first time, the oil being pumped from its 11 fields and the reserves will belong wholly, through the Abu Dhabi National Oil Company (Adnoc), to the Government. There will no longer be any foreign shareholding.

The UAE had held a 60 percent stake in Abu Dhabi Company for Onshore Oil Operations (ADCO). Four of the world’s largest stock-listed energy companies – ExxonMobil, Royal Dutch Shell, Total, and BP – have each held 9.5 percent equity stakes in the ADCO concession until then [69]. As we mentioned Abu Dhabi took full control of the UAE’s biggest oilfields after its 75 years old venture with the four western oil giants expired on January 10th 2014. Some of the old partners, notably ExxonMobil, expressed concern about operating side by side with rivals in an ADNOC-controlled concession, with all partners expected to share their technology.

It is well known that in the half-century that passed since the first commercial discovery in the UAE, western oil demand has started to wane, while consumption in Asia has soared, spurring Asian companies to seek security in stakes in oil and gas fields around the world. Abu-Dhabi was already considering new partnerships in new terms with its long-term collaborators or with Asian newcomers. Since 2012, CNPC had been appraising the technical potential of five onshore and two offshore undeveloped blocks covering much of the area west of Abu Dhabi’s legacy fields.

Finally, three months later in April 2014 a historic landmark deal was announced. The deal allowed a Chinese NOC, CNPC, to gain access to both onshore and offshore concessions under one operating company in Abu Dhabi for the first time [70]. For China, the award marked a break away from its role as a cheap go-to for construction projects – such as the Fujairah pipeline – to become a producer willing to go where others did not dare: Iraq, Sudan, Afghanistan. In the six years since China and the UAE signed this historic agreement the UAE-China partnership has greatly extended at a fast pace to other fields and other areas [71-76].

We mentioned earlier that on January 17th, 2014 [29], exactly one week after the Abu-Dhabi 75 years old concessions expired, Abu-Dhabi owned CEPSA and Jho Low’s SRG purchased Coastal Energy Resources. According to the DOJ court Case 2:17-CV-04438, Jho Low invested US$50 mln in the partnership that was traceable to the 1MDB fund [31] and CEPSA purchased Jho Low’s share for US$300 just one week after closing the deal (a 500% return in one week). 

Are you wondering what did Shell achieve by relinquishing without a fight these prime underdeveloped oil concessions, that have the potential to produce hundreds of thousands of barrels of oil per day in the coming decade?

In April 2014 the same month that China signed its historic first oil concession agreement with the UAE, Shell Oil also signed a historic agreement with China. The agreement – China Petroleum & Shell Global Cooperation Agreement – was signed by the two companies on April 8th 2014 in Beijing, according to CNPC [77].

In June 2014 two months after Shell and CNPC signed its historic agreement in Beijing Shell signed another historic cooperation agreement with CNOOC. The agreement —China National Offshore Oil Corporation & Shell Global Strategic Alliance Agreement—was signed by the two companies on June 17th 2014. Chinese Premier Li Keqiang, who was on an official visit to London, and British Prime Minister David Cameron witnessed the signing of the Agreement [78].

On the occasion, the CNOOC Chairman Wang Yilin said: “We are delighted to see our strategic partnership with Shell taking a step further under the Agreement. It is another milestone for our already fruitful, mutual-beneficial cooperation. I look forward to a deeper and more extensive cooperation with Shell.” [79]

Ben van Beurden, Shell’s CEO, said: “We are very happy to reconfirm our commitment to the Shell-CNOOC strategic partnership that has borne many fruits. We are committed to growing business together with CNOOC and other Chinese partners and cooperating with them internationally to bring more and cleaner energy to China.” [79]

Conclusion

In retrospect, one can see that Marcel Van Poecke and the Carlyle group have rendered a great service to Royal Dutch Shell over the years by creating investment vehicles that have allowed Shell to offload its mature assets safely and sell its refineries before downturns in the downstream business, like the one brought by the so-called 2008 financial crisis.

The overvalued purchase of CEPSA by the Carlyle group is part of the complex 1MDB operation, a close collaboration of the intelligence services of US, China, and UK, that also counted with the collaboration of the governments of Spain, Turkey, Japan, Thailand, Taiwan, Malaysia, India, Azerbaijan, The Netherlands, and Israel. The 1MDB operation goal in the UAE was to facilitate the payment of bribes to the Abu-Dhabi royalty that allowed these historical agreements between China, UAE, and Shell to become a reality.

The Carlyle Group, which has managed billions of dollars of UAE’s SWF money for years and also has experienced incredible growth in China, sits at an important intersection that allowed it to become a wild card, a useful tool in this state-corporate run operation. The Carlyle-Mubadala alliance has been a powerful instrument that possesses the required flexibility to make this operation possible avoiding the close scrutiny of the regulatory agencies and for all practical purposes allowing the legalization of large-scale state-sponsored bribery.

References :

[1] The Carlyle group to acquire a significant minority shareholding in CEPSA from Mubadala (Carlyle News Release, April 8th 2019) 

[2] The Carlyle group completes acquisition of shareholding in CEPSA from Mubadala (Carlyle Group Media Release, October 15th 2019)

[3] The Carlyle group completes acquisition of shareholding in CEPSA from Mubadala (CEPSA Press Release, October 15th 2019)

[4] Carlyle dealmaker puts $100 mln of his cash into own fund (Financial Times, October 14th 2018)

[5] Abu-Dhabi creates $125 billion fund by merging Mubadala, IPIC (Reuters, January 21st 2017)

[5] Abu-Dhabi SWF gets entangled in Global 1MDB scandal (WSJ, December 1st 2016)

[7] United States of America vs All Funds on deposit in Bank Privee Edmond de Rothschild ( DOJ case 2:20-cv-05912)

[8] Key Figure in 1MDB Probe is arrested in Abu-Dhabi (WSJ, August 18th 2016)

[9] Alleged co-conspirators sentenced to Prison (WSJ, June 16th 2019)

[10] Alleged 1MDB conspirator says he is a scapegoat for emiratis (WSJ, January 23rd 2019)

[11] UAE’s ambassador to US linked to 1MDB scandal (WSJ, June 30th 2017)

[12] Sovereign Power: The Impact of Abu-Dhabi SWFs on the US economy (Javier Ferrandis, LinkedIn, March 4th 2020)

[13] Carlyle Exec: CEPSA Deal nothing to do with oil rebound (CNBC, 2019 April 8th)

 [14] Carlyle co-CEO Youngkin to Exit, Leaving Lee in Sole Control (Bloomberg, July 21st 2020)

 [15] Glenn Youngkin to retire as CEO after 25 years (Carlyle News Release, July 21st 2020)

 [16] Glenn Youngkin to retire as co-CEO of the Carlyle Group (Washington Business Journal, July 21st 2020)

 [17] Goldman Sachs agrees to a $3.9 billion 1MDB settlement with Malaysia (CNN, July 24th 2020)

 [18] Najib Razak, Malaysia’s former prime minister, found guilty in graft Trial (The New York Times, July 28th 2020)

 [19] Goldman Sachs Charged in Foreign Bribery Case and Agrees to Pay over $2.9 Billion (DOJ, October 22nd 2020)

 [20] Malaysian finance minister : It’s reasonable to ask Goldman Sachs for $7.5 billion over 1MDB agony (CNBC, January 14th 2019)

 [21] David Solomon DJs in the Hamptons after reaching a $3.9 billion settlement ( New York Post, July 27th 2020)

[22] Goldman cuts quarterly profit by 91% after $3.9 billion settlement (Markets Insider, August 7th 2020)

 [23] Tim Leissner settles FCPA charges with the SEC (The FCPA Blog, December 16th 2019)

 [24] Ex-Goldman banker says he warned bosses about Jho Low, 1MDB (Bloomberg, November 20th 2020)

 [25] Abu-Dhabi fund buys Spain’s CEPSA (Financial Times, February 16th 2011)

 [26] IPIC acquires TOTAL 48.83 % stake in CEPSA (Institutional Investor, August 2nd 2011)

 [27] Spain’s CEPSA to buy Coastal in deal worth $2.2 billion (Reuters, November 18th 2013)

[28] CEPSA adquiere la norteamericana Coastal Energy por 1.630 millones de euros (El Economista, November 19 2013)

[29] CEPSA finalizes Coastal Energy Takeover (1/20/2014, Offshore Energy Today)

[30] La CNMC da luz verde a la compra de la petrolera canadiense Coastal Energy por CEPSA ( 1/18/2014 El Confidencial Digital)Coastal completes merger with CEPSA ( Coastal Energy Press Release, January 14th 2017)

[31] U.S. Links Malaysia Prime Minister to Millions Stolen From Fund. (7/21/2016, Bradley Hope, Tom Wright, WSJ)

[32] The reserves fraud case at the center of the 1MDB scandal (Javier Ferrandis, Linkedin, December 19th 2019)

[33] Thailand Department of Mineral Fuels 2008 Annual Report; 2009 Annual Report; 2010 Annual Report; 2011 Annual Report; 2012 Annual Report; 2013 Annual Report; 2014 Annual Report; 2015 Annual Report; 2016 Annual Report; 2017 Annual Report; 2018 Annual Report (Thailand Ministry of Energy). These documents are available for public download at www.dmf.go.th

 [34] UniThai-COOEC Consortium wins Gulf of Thailand Decommissioning Gig (April 11th 2019, IHS Markit, Connect Upstream Insight)

[35] Carlyle to buy up to US $4.8 billion stake in CEPSA from Abu Dhabi’s Mubadala (April 8th 2019, Reuters Business News); Carlyle Group to buy up to 40% stake in Spanish oil company from Mubadala (April 8th 2019, CNBC)

[36] Carlyle to sell stake to MidEast government (New York Times, September 21st 2007)

[37] Government of Abu-Dhabi buys stake in Carlyle (Washington Post, September 21st 2007)

[38] CALPERS buy stake in Carlyle Group for $175 million, invests in funds (The Wall Street Journal, February 2nd 2001)

[39] CALPERS and Carlyle (The Nation, March 14th 2002)

[40] Carlyle took debt to pay owners dividend before IPO (The Washington Post, March 13th 2012)

[41] Reject Carlyle Group’s attack on investor rights, Groups tell SEC (Public Citizen, February 3rd 2012)

[42] Carlyle eyes $7.5 – $8 billion valuation in IPO (Reuters, April 10th 2012)

[43] Carlyle IPO raises unimpressive US$671mln (Reuters, May 2nd 2012)

[44] The big loser in Carlyle’s IPO (Forbes, May 2nd 2012)

[45] Mubadala Annual Report 2012 (Mubadala, December 2012)

[46] Petroplus: Rapid rise and fall of a refiner (Reuters, April 4th 2012)

[47] Shell to cease refining in France (Petroleum Economist, August 1st 2007)

[48] Shell agrees to sell three french refineries (O&G Journal, August 2nd 2007)

[49] AtlasInvest in second European refinery acquisition (Petroleum Economist, May 9th 2012)

[50] Shell, Huo’s Group and the Carlyle Group reach agreement on Tongyi lubricants stake (Fuel and Lubes, August 7th 2014)

 [51] Carlyle backed Assala Energy acquires Shell Gabon Assets (Carlyle Press Release, March 24th 2017)  

 [52] The Carlyle group acquires Enermech from LimeRock partners (Carlyle Press Release, October 15th 2018)  

 [53] Enermech gets to work on world’s largest FLGN project (Offshore Energy, March 21st 2017)  

 [54] Neptune Energy Company Highlight (Carlyle, 2020)  

 [55] Neptune Energy appoints Odin Estensen as MD for Norway (Neptune Energy, May 2018)  

 [56] Alam El Shawish West Field (Neptune Energy, 2020)  

 [57] Carlyle, Cairn Energy backed group among bidders for Shell’s Egypt assets (Reuters, July 15th 2020)  

 [58] Oranje-Nassau Energy BV (ONE) acquires UK operated SEAN assets from Esso and Shell (ONE Dyas, May 6th, 2011)

 [59] ONE Dyas assets (December 2020)

 [60] Carlyle acquires spanish certification group Applus+ : The largest investment undertaken by a private equity fund in Spain. (Carlyle Press Release, July 23 2007)

 [61] United States Energy Security Council Members (USESC, December 2020)

 [62] Carlyle group to float NCT operator Applus+ (The Irish Times, July 10 2013)

 [63] Morgan Stanley, UBS hired to run Applus+ IPO (Reuters, December 4th 2013)

 [64] Applus+ Board Members (December 2020)

 [65] Jeoren Van der Veer to join Mazarine Energy as senior adviser (Mazarine Press Release, October 2020)

 [66] Energy Excutive of the Year Award (Oil & Money, October 8th 2019)

 [67] Energy Intelligence Board of Directors (Energy Intelligence, December 2020)

 [68] The end of an incredible oil Powered Era (The National News, January 8th 2014)

 [69] UAE takes charge of ADCO fields (Gulf Business, January 8th 2014)

 [70] China breaks western grip on Abu-Dhabi oil deals (The Telegraph, April 29th 2014)

 [71] The UAE and China thriving partnership (The Hufftington Post, July 15th 2015)

 [72] ADNOC Completes ADCO deal with 4% stake to CEFC(Oil & Gas Middle East, February 20th 2017)

 [73] ADNOC awards PetroChina stakes in two offshore concessions (Reuters, March 21th 2018)

 [74] CNPC to sign oil exploration refining pact with UAE’s ADNOC this month (Reuters, July 6th 2018)

 [75] China and UAE sign strategic oil and gas agreement (Gulf Business, July 22nd 2019)

 [76] China to expand its influence in the Middle East with major oil deal (RT News, August 12th 2020)

 [77] CNPC and Shell strengthen global cooperation (Oil & Gas Journal, April 10th 2014)

 [78]  Shell signs global strategic alliance with CNOOC (Reuters, June 17th 2014)

 [79]  Shell and CNOOC sign global strategic alliance agreement (Shell Press Release, June 17th 2014)

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