UAE drive to achieve gas self-sufficiency will need $40Bln of investments because of field complexities
The Abu Dhabi National Oil Company (ADNOC) will need to invest more than $40 billion in order for the United Arab Emirates to attain natural gas self-sufficiency due to the complex nature of the country’s gas resources and as the UAE also expands LNG production.
The investment figure comes in a new report on ADNOC by the UK-based energy consultants Wood Mackenzie.
The report looks at the gas expansion plans, including sour and unconventional gas fields that were previously thought too complex technically and expensive to develop.
“The commitment to self-sufficiency is driving ADNOC to examine all options in its push for more gas,” said Alexandre Araman, the Principal Analyst of Middle East Upstream at Wood Mackenzie.
Growth strategy
“Its growth strategy, approved by the Supreme Petroleum Council, relies on the development of ultra-sour gas, unconventional and gas cap resources. Associated gas expansion is also expected to contribute as well as exploration and new discoveries,” the report said.
The report cites the Ghasha development as a critical piece of the self-sufficiency puzzle, with a target to produce 1 billion cubic feet a day of sales gas before 2030.
The concession contains nine offshore fields in the Arabian Gulf.
“The high costs associated with an offshore ultra-sour gas development, the sulphur handling requirements and the typically low domestic gas prices result in challenging economics with cost estimates of at least $20Bln,” the report added.
The report cites the Shah Gas Development expansion as another key project and plans are underway to boost the total capacity to 1.85 bcf per day from the current level of 1.45 bcf per day.
“If this is approved, sales gas should increase from 0.74 bcf per day to 0.94 bcf per day,” said the report.
The report added that due to the ultra-sour nature of the gas at Shah, any development was always extremely challenging from both a technical and budget perspectives.
Other projects in the pipeline include large untapped unconventional gas resources at Ruwais Diyab as well as plans for developing gas caps and additional conventional gas resources, but the report states that technical issues and escalating costs could see the timelines stretched for many of the projects being planned.
Advancing
“ADNOC is moving swiftly to advance on all fronts via mega-development projects, ambitious production targets and IOC partnerships,” said Wood Mackenzie.
“But the complex and expensive nature of these resources has derailed progress with escalating costs and final investment decision delays,” it concluded.
Separately, ADNOC Gas is also development the Ruwais LNG project consisting of two liquefaction Trains of 4.8 million metric tonnes annum and total nameplate capacity of 9.6 MTPA.
The existing liquefaction plant on Das Island currently has export capacity of 6 MTPA.
Two LNG newbuilds ordered from Chinese shipyard by logistics unit of Abu Dhabi National Oil Company
Abu Dhabi National Oil Co (Adnoc), the owner of the Das Island LNG export plant in the United Arab Emirates, said its logistics arm had signed a contract with a Chinese shipyard for two newbuild LNG carriers.
Adnoc Logistics and Services (Adnoc L&S) said the two vessels with 175,000 cubic metres capacity would join the existing fleet in 2025.
“The purchase, part of the company’s broader growth and expansion strategy, further reinforces its position as the UAE’s leading shipping and maritime operator,” said Adnoc L&S.
“The new LNG vessels will be crucial enablers of Adnoc’s 2030 growth strategy, supporting its existing LNG business as well as its ambitions to grow its LNG production capacity,” the company explained.
The two carriers will be built at the Jiangnan Shipyard, located northeast of Shanghai on Changxing Island at the mouth of the Yangtze River.
Adnoc L&S has the largest and most diversified fleet of vessels within the Middle East and its trading fleet transports crude oil, refined products, dry bulk, containerised cargo, liquefied petroleum gas and LNG to global markets through its owned and chartered vessels.
Growth strategy
“The expansion and modernisation of our LNG fleet will be a key enabler of Adnoc L&S’ growth strategy. This acquisition helps future-proof our fleet with more sustainable, modern vessels capable of serving our customers for the next 25 years and deepens our partnership with Jiangnan Shipyard,” explained Captain Abdulkareem Al Masabi, Chief Executive of Adnoc L&S.
Adnoc L&S currently has eight LNG carriers among its fleet of over 40 vessels.
The newbuild LNG vessels are significantly larger than the current Adnoc L&S fleet of LNG ship which each have a capacity of 137,000 cubic metres.
Lin Ou, Chairman of Jiangnan Shipyard, said the yard was proud to continue its relationship with Adnoc L&S.
“This order for large LNG carriers is another milestone in the strategic portfolio of Jiangnan shipyard. We are committed to delivering these vessels on time, with good quality and ensuring the highest possible customer satisfaction,” stated Lin.
The Das Island LNG plant produces about 6 million tonnes per annum of LNG and came on stream in 1977 as the first liquefaction and production facility in the Arabian Gulf.
The plant is 70 percent owned by Adnoc and the other shareholders are Japan’s Mitsui & Co with 15 percent, UK major BP with 10 percent and TotalEnergies with 5 percent.
Northern-most emirate in LNG-exporting UAE signs deal with Italian energy company Eni to target gas
Italian energy company Eni has been awarded a licence for Block 7 located in Ras Al Khaimah, the northern-most emirate of seven in the United Arab Emirates, as the Arab nation moves to boost its exploitable natural gas resources in addition to being an LNG exporter.
