ADNOC Gas Plans $15B Capex for Next Five Years, Driven by UAE Gas Demand

Wedoany.com Report-Nov 16,  The integrated gas processing unit of Abu Dhabi National Oil Co. (ADNOC) said it has raised its planned 2025–29 capex of $13 billion to $15 billion to capitalize on growing domestic demand for natural gas.

“In the UAE, the annual growth in gas demand to 2030 is expected to be 6 percent, versus an expected 2 percent at the time of the IPO [initial public offering]”, ADNOC Gas said in a statement. “This strong increase in demand will be driven by higher economic activity, population growth and industrial expansion, underpinned by AI data centers and the food industry”.

During the five years, ADNOC Gas aims to complete three gas projects, including the Big Oil-backed Ruwais LNG. Targeted to start production 2028, the 9.6 million tons per annum facility would more than double ADNOC’s LNG output.

The other two are the Maximization of Ethane Recovery and Monetization Project, which is planned to produce up to 3.4 million tonnes per annum (MMtpa) of ethane and natural gas liquids, and the IGD-E2 project, designed to have a gas processing capacity of 370 million cubic feet per day.

Earlier, however, ADNOC Gas canceled the Das Island LNG 2.0 project.

“The updated growth strategy also advances the design and concept study of large-scale pre-FID projects to accommodate a significant increase in the company’s gas processing capabilities as ADNOC expands its upstream production capacity, as well as the Bab Gas Cap project, which are expected to be completed after 2029”, added the online statement.

ADNOC Gas expects Bab Gas Cap, which will serve the onshore Bab field, to add 1.9 billion cubic feet per day of processing capacity.

ADNOC Gas chief executive Ahmed Alebri said, “By advancing our projects and optimizing our existing assets, we will continue to support the UAE’s industrial diversification while delivering more gas to our domestic customers through our expanding infrastructure”.

“Additionally, through our decarbonization initiatives, we will help meet rising global demand for lower-carbon natural gas, positioning ADNOC Gas as a leader in the sustainable global gas industry”, Alebri added.

Simultaneously ADNOC Gas reported an 11 percent year-on-year increase in net profit to $1.24 billion driven by higher sales volumes and prices. Revenues rose eight percent against the third quarter of 2023 to $6.28 billion, exceeding $6 billion for four consecutive quarters. EBITDA climbed 18 percent year-over-year to $2.21 billion. Free cash flow stood at $1.18 billion.

Under the new strategy ADNOC Gas plans to raise EBITDA by over 40 percent by 2029.

Ruwais LNG Takeover

In a separate press release ADNOC Gas said it expects to acquire its parent company’s 60 percent stake in Ruwais LNG, ADNOC’s biggest gas liquefaction project, in the second half of 2028 at cost. The stake amounts to $5 billion according to ADNOC Gas. ADNOC Gas has already been managing construction and offtake marketing for the project, which reached a final investment decision and awarded a $5.5 billion build contract last June.

In July ADNOC entered agreements farming out a 40 percent ownership in the Al Ruwais Industrial City project to BP PLC, Mitsui & Co. Ltd., Shell PLC and TotalEnergies SE. The companies separately signed up for a 10 percent stake each in the Al Ruwais Industrial City project, which is planned to have two trains.

The facility would more than double ADNOC’s LNG output, according to the company. Last year, the United Arab Emirates was the third biggest LNG exporter among Middle Eastern countries, sending out a total of 7.7 billion cubic meters (271.9 billion cubic feet), behind Qatar (first) and Oman (second), according to the Energy Institute’s “Statistical Review of World Energy”.

Along with the investment agreements, Shell subsidiary Shell International Trading Middle East Ltd. FZE also inked an agreement to buy one MMtpa from Ruwais LNG. Japan’s Mitsui also simultaneously penned an offtake of 600,000 metric tons a year.

According to ADNOC Gas, over seven MMtpa from Ruwais LNG have already been committed to international buyers.

Indian Supply Deal

In a separate project, ADNOC Gas said in another announcement Thursday it had won a contract to supply GAIL India Ltd. with 0.52 MMtpa of LNG. The 10-year deal will be fulfilled by the existing Das Island liquefaction facility, which has a capacity of six MMtpa. Delivery will start 2026.

"Global LNG demand is expected to rise by 15 percent over the next decade, driven by industrial coal-to-gas switching in China and the increased use of LNG for power generation across Southern and Southeast Asia”, Rashid Khalfan Al Mazrouei, senior vice president for marketing at ADNOC Gas, said about the agreement with India’s state-owned GAIL.

“India is witnessing a growing demand for LNG to meet its increasing natural gas demand in a diversified sectoral pattern”, GAIL marketing director Sanjay Kumar said. “GAIL plans to significantly increase its term LNG portfolio in the coming years to meet this rising demand”.