2024 saw a steady drumbeat of European acquisitions by Gulf companies, culminating in Abu Dhabi National Oil Company’s takeover of German chemicals firm Covestro for a record $15.1 billion, the biggest by a Middle East company in 16 years. It was followed in January 2025 with ADNOC’s logistics arm $1.1bn deal to take control of UK-based tanker operator Navig8.
So far, it looks like a happy marriage. European nations face stagnant growth, high-energy costs, and expensive sustainability goals, while the nations of the Gulf are flush with cash, and keen to expand overseas. As well as its foray into chemicals, ADNOC has been buying up natural gas fields in Azerbaijan and signing lucrative LNG supply deals with German companies.
These LNG deals are welcome in Germany as it struggles to wean itself off Russian gas amid European sanctions following Russia’s 2022 invasion of Ukraine. But the expansion of Gulf companies into Europe is more than a short term fix: it represents a reshaping of global power dynamics that puts Europe – and its companies – at the heart of the push for a greener future.
As a state-owned oil company, ADNOC is fully signed up to the United Arab Emirate’s ambition to achieve net-zero emissions by 2050, and investment in low-carbon technologies and renewable energy projects will be a key part of this. Covestro is a leader in sustainable materials, and the October deal shows that ADNOC is putting its money where its mouth is.
Gulf investors are leveraging their capital, ambition, and strategic vision to redefine their role in a post-oil world, and for European companies facing tough economic headwinds, these sorts of deals are not just a lifeline, but partnerships with transformative potential.
Covestro and Navig8 may just be the beginning. On November 27, ADNOC set up an investment company, XRG, to target investments in low-carbon energy and chemicals companies, bolstered with a staggering $80 billion. In a statement, ADNOC said that XRG will begin operating in the first quarter of 2025, targeting chemicals and natural gas companies.
In July 2024, the total value of European assets by Middle Eastern buyers was $24 billion, the highest level since 2008 and 74% above the average for the last decade, Reuters reported. Last year saw some notable acquisitions by other Gulf companies, including two in Spain.
In November 2024, the Spanish government finally approved Saudi Telecom (STC) taking a 9.9% stake in Telefonica, a deal that it had initially opposed. It took over a year, and required the Spanish government to up its stake in Telefonica through its holding company, Sociedad Estatal de Participaciones Industriales (SEPI) to 10% to prevent STC becoming the largest shareholder.
The Spanish experience with STC shows that in some European nations there has been an issue of perception when it comes to Gulf investment, and that some view the interest from Gulf companies as alarming. In April 2024, an Abu Dhabi-backed investment fund abandoned a takeover of the Telegraph newspaper in the face of political opposition from the UK state.
These two cases demonstrate that there is legitimate concern across a number of European states about the risks of selling off the national silverware to investors from the Gulf, but the Covestro-ADNOC deal demonstrates a blueprint for similar deals going forward.
In response to concerns from some lawmakers and the public over the foreign takeover of a storied German company, ADNOC made a number of concessions, including a promise not to sell, close, or significantly reduce Covestro’s business activities and protect it technology and intellectual property. It also retained Covestro CEO Markus Steilemann until at least 2028.
Middle Eastern NOCs and state-owned investment arms are attracted to European companies due their relatively low valuations – at least compared to US companies – but also its relatively light regulatory environment (the STC case notwithstanding), again compared to the US.
In November 2023, President Joe Biden’s administration forced a Saudi Aramco-backed venture capital firm to sell its shares in a Silicon Valley AI chip startup owned by Sam Altman, Bloomberg reported. With all his talk of economic tariffs and protectionism, President-Elect Trump is likely to make Biden look like Milton Friedman. But when it comes to protectionism, America’s loss could be Europe’s gain.
And it goes both ways: European companies need Gulf investors, which are currently flush with cash due to high oil prices and looking to expand.
As Miguel Azevedo, Middle East and Africa vice-chairman of investment banking at Citi, recently told Reuters: “The UAE have a very clear strategy of creating global champions in the industries they know well and they perform well in,” he said. “They have experience, vision and the capital to do so. They are very business-driven and politically they are seen positively.”
For cash-strapped European companies, Gulf investors are a source of both capital and expertise. For Gulf NOCs, European companies mean diversity and the resource to meet sustainability goals, and secure valuable gas resources for the future. America’s retreat into tariffs and economic protectionism could be Europe’s opportunity when it comes to the Gulf.
