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    UAE's ADNOC will continue to invest heavily in gas

    August 5, 2022 - Country Report


      What's happened?

      Abu Dhabi National Oil Company (ADNOC, a state-controlled hydrocarbons firm) has awarded further work on its flagship upstream gas development project and is fast-tracking construction of a new liquefied natural gas (LNG) export terminal. The tight global energy market is spurring ADNOC to prioritise gas capacity expansion supported by an uplift in capital spending enabled by elevated international energy prices.

      Why does it matter?

      ADNOC is leveraging elevated oil revenue to invest heavily across its US$127bn 2022-26 plan (covering oil and gas and upstream and downstream investment). The drive to increase supplies of gas is being prioritised, not only for its growing export potential but also to restore domestic self-sufficiency amid growing global concerns about energy security and to feed local industrial expansion.

      ADNOC's chief executive, Sultan Ahmed al-Jaber, visited France in July to sign a long-term strategic pact with Total, a French upstream partner, to collaborate on "gas growth". The French government had pushed for the UAE to tap its spare oil capacity to help to offset the withdrawal of Russian oil and gas to European markets since the invasion of Ukraine, but the UAE has reaffirmed its commitment to OPEC+ production targets.

      The main gas output increases will come from the combined development of the Ghasha and Hail offshore sour gasfields, due to be ramped up from 2025 to produce 1bn cu ft/day by 2030. A redesign by Technip Energies (France) is expected to be completed in the fourth quarter of 2022, and shortlisting for the main construction contracts is under way. On July 27th ADNOC awarded two decade-long contracts worth a combined US$2.1bn to its ADNOC Drilling subsidiary on the project. Two days later Eni (Italy), the Ghasha concession's main foreign shareholder, announced its second find thereof this year, of 1-1.5trn cu ft on the Block 2 offshore concession, with plans to fast-track development.

      Export capacity is also being bolstered. ADNOC's latest five-year investment plan aims to double LNG export capacity to 12m tonnes/year. There are plans for a new 9.6m-t/y export terminal at Fujairah, an eastern oil-trading hub better located to serve ADNOC's predominantly Asian long-term contracted clients and which avoids the strategically important but vulnerable Strait of Hormuz, where the current ageing terminal on Das Island is located. Contracting on design and construction of the two-train facility is advancing, with commissioning due in around 2026.

      What next?

      ADNOC will continue to invest heavily in gas development throughout 2022-26, stimulating domestic manufacturing growth via its strong local content programme. Increased production from 2025 onwards will support real GDP growth and improve energy security, as well as bolstering external surpluses as import demand falls.


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