ADNOC investment decision for Ruwais LNG in UAE confirmed by Shell as three other players also take stakes
Shell Plc has confirmed its shareholding with four other partners in the new LNG export plant being developed in the United Arab Emirates by Abu Dhabi National Oil Company’s (ADNOC) at Al Ruwais.
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.
International energy services firm Kent wins contract to boost natural gas in north of LNG producer UAE
Kent, the privately-owned international integrated energy services company headquartered in Dubai in the United Arab Emirates, has won a natural gas pipeline project contract to improve energy security for some of the smaller of the seven emirates that make up the UAE.
The Kent group, which is backed by private equity firm Bluewater, was named as the project management consultant (PMC) for the new pipeline in the northern UAE to supply RAKGAS.
RAKGAS is a state-owned energy business set up in 1984 in Ras Al Khaimah, transitioning from a gas company to a diverse energy provider.
Ras Al Khaimah is the largest city and capital of the emirate of Ras Al Khaimah.
It is the sixth-largest city in the UAE after Dubai, Abu Dhabi, Sharjah, Al Ain and Ajman.
Pipeline route
The pipeline will stretch from the Taweelah-Fujairah Gas Pipeline to Ras Al Khaimah with a connection to the Sajaa gas storage in the Sharjah emirate.
The Taweelah-Fujairah link is an existing natural gas pipeline running for 244 kilometres (152 miles) in length from Taweelah in Abu Dhabi to Al Fujairah.
Kent will be responsible for coordinating efforts between RAKGAS and the front-end engineering and design (FEED) study contractor, ensuring that the project’s progression remains on target and aligned with its planned objectives.
“Collaborating with Kent on this project is a testament to our vision for energy supply in the region,” said RAKGAS Chief Executive Chris Wood.
“Their expertise and experience in the UAE will steer this project to success, ensuring we deliver on our commitments for energy security in Ras Al Khaimah,” Woods stated.
Partnership
Tush Doshi, Chief Operating Officer at Kent, said he was proud to partner with RAKGAS on this project.
“It will allow us to bring our world-class PMC delivery expertise to the Northern Emirates,” Doshi explained.
“We look forward to a long-lasting relationship with RAKGAS, as we ensure a continuous and seamless execution across leading energy projects in the region,” said the Kent COO.
Both Kent and RAKGAS added that they had adopted a “proactive approach” to addressing the region’s energy needs.
The Kent group is growing as a Middle East player. It gained some engineering traction in July 2021 when it completed the acquisition of the majority of the oil and gas division of Montreal, Canada-based engineers SNC-Lavalin.
Philippines set to compete for Asian LNG cargoes by year-end when two import facilities will be operating
The Philippines has entered the LNG importer list in a low-key way after years of planning as a cool-down cargo was delivered to Subic Bay for the Floating Storage Unit (FSU) “Ish” as part of the commissioning of the first LNG terminal in Batangas Bay and a second vessel for a separate project is scheduled to arrive in July.
Abu Dhabi National Oil Company plans initial public offering of stake in LNG and gas-processing units
Abu Dhabi National Oil Company (Adnoc) has invited investment banks to pitch for roles in the initial public offering (IPO) of its natural gas business during the first half of 2023.
Several investment banks have been asked for proposals to act as joint global coordinators and bookrunners in the IPO to join New York-based Goldman Sachs as part of a planned banking syndicate, according to bankers familiar with the plans.
Adnoc is combining its gas-processing subsidiary with its main gas export unit, Adnoc LNG, into a single listed entity and has engaged Goldman Sachs as the principal bank to oversee the various transactions.
Adnoc plans to offer investors a minority stake in the new company through an IPO on the Abu Dhabi Securities Exchange in 2023.
Adnoc LNG was the first production company in the Arabian Gulf and processes feed gas at Das Island, located 160 kilometres (100 miles) off the coast of Abu Dhabi.
The LNG company also supplies one billion standard cubic feet of gas per day to the United Arab Emirates national grid, contributing to Adnoc’s commitment towards gas self-sufficiency in the UAE.
Current stakes
Adnoc LNG is majority owned by the Abu Dhabi-based firm with a 70 percent share of the company. The other shareholders are Japan’s Mitsui & Co with 15 percent, UK major BP with 10 percent and TotalEnergies with 5 percent.
Adnoc said late last month that the consolidation of the two entities would create one of the world’s largest gas-processing companies with a processing capacity of around 10 billion standard cubic feet per day.
Analysts note that Adnoc in the UAE and other nations in the region such as Qatar are overhauling their corporate capabilities to replace all Russian energy imports as early as mid-2024 as Western sanctions were imposed over the Russia's invasion of Ukraine.
The UAE is comprised of seven emirates and the leading energy emirate is Abu Dhabi, which also has the Ghasha mega-project, the world’s largest offshore sour-gas development.
The emirates, outside of Abu Dhabi, have varying degrees of more limited energy resources in Dubai, Sharjah, Ajman, Umm Al-Quwain, Fujairah and Ras Al Khaimah,
The multi-billion-dollar Ghasha project will play a vital role in meeting the UAE’s gas self-sufficiency objectives.
Adnoc says that the Ghasha mega-project draws on its long-standing sour-gas expertise, including its Shah onshore ultra-sour gas field project, its pioneering work in the creation of artificial islands and the wide and deep sour-gas capabilities of its concession partners.
Adnoc is also currently unlocking potential unconventional gas resources as part of its integrated gas strategy and since late 2019 it has announced the discovery of 160 trillion standard cubic feet of recoverable unconventional gas.
Abu Dhabi National Oil Company awards more drilling contracts as new UAE LNG project progresses
Abu Dhabi National Oil Company (ADNOC), the oil and gas company and LNG producer in the United Arab Emirates, has awarded three framework agreements valued at 14.68 billion UAE dinars ($4 billion) for integrated drilling services to support the ongoing expansion of its oil and natural gas production activities.
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.
LNG producer Abu Dhabi planning IPO of drilling company at forefront of Arab Gulf gas search
Abu Dhabi National Oil Company (ADNOC), the longest-standing LNG producer in the Middle East for the United Arab Emirates, which is the third-largest oil producer in OPEC, is expected to proceed with an initial public offering of a stake in the ADNOC Drilling company with operations on land and sea.
South Korean head of IMO calls six Gulf area attacks on tankers and threats ‘intolerable’
The International Maritime Organization (IMO) meeting at its headquarters in London has condemned six attacks on ships in the Strait of Hormuz and the Sea of Oman, two main transit routes for LNG carriers and oil tankers, with IMO Secretary-General Kitack Lim calling the threats to shipping “intolerable”.
The statement came at the end of an IMO Council meeting from July 15-19 at which the Arab Gulf incidents were debated.
After debate, the IMO Council decided to condemn the attacks and expressed its concern over the grave danger to life and the serious risks to navigational safety.
“Threats to ships and their crews, peaceably going about their business in any part of the world, are intolerable,” said the Secretary-General.
US sanctions on Iran because of its nuclear policies have raised tensions in the region and around the narrow Strait of Hormuz, through which LNG exports from Qatar and the UAE must pass.
The IMO Council emphasised the need for flag States and shipowners and operators to review the maritime security plans for their ships and implement necessary measures to address the heighted security risks.
“I strongly urge all Member States to redouble their efforts and to work together to find a long lasting solution to ensure the safety and security of international shipping around the globe and the protection of the marine environment,” said Lim.
“We owe it to our industry, which is indispensable to the world, and to our seafarers,” he added.
The attacks include one of 12 May 2019 on the Saudi Arabian-flagged vessels “Amjad” and “Al Marzoqah” and the Norwegian-flagged vessel “Andrea Victory”.
The UAE-flagged vessel “A. Michel” was then attacked off the coast near the UAE port of Fujairah and suffered sabotage damage and on 13 June, the Marshall Islands-flag “Front Altair” and Panama-flag “Kokuka Courageous” were attacked, suffering hull damage and fire, while located in the Sea of Oman near the Strait of Hormuz.
The Council is the executive body of the IMO, a United Nations agency, and consists of 40 member states elected by the IMO Assembly.
Japanese LNG imports edge higher even as shipments from Middle East hit 14-year low
Japanese liquefied natural gas imports edged higher by 0.3 percent in April after previously dropping for five straight months as LNG shipments from the Middle East plunged to a 14-year seasonal low and the nation’s energy demand slowed on the nuclear and thermal coal fronts.
Japan received 5.62 million tonnes of LNG in April compared with 5.60MT in the same month of 2018, according to preliminary figures from the Ministry of Finance.
Imports of thermal coal, a competitor to LNG, also declined by 2.5 percent to 8.5MT.
Nine of Japan's nuclear power plants, which numbered 54 on line before the Fukushima disaster in 2011, had re-started in April, though only seven are now operating.
LNG Cargoes delivered to Japan in March 2019 had amounted to 7.29MT compared with 7.93MT in March 2018, a fall of 8.1 percent.
The April 2019 rise in LNG deliveries to Japan was the first since October 2018 when 6.53MT was received, a 6.5 rise on the previous October.
Even during the peak winter months from November 2018 through January 2019, imports dropped as the Japanese followed fuel-saving measures and the government encouraged a drop in costly LNG imports.
The cost of the April 2019 cargoes came to 313.5 billion yen ($2.83Bln), a rise of 5.8 percent from the 296.2Bln yen ($2.68Bln) the cargoes cost in the same month a year ago.
For balance of payments purposes, Japan has been trying for a number of years to bring LNG import costs under control.
The Ministry’s data for April showed a plunge in imports from the Middle East region, to their lowest level since April 2005.
The April 2019 shipments from countries like Qatar, the United Arab Emirates and Oman totaled 945,000 tonnes versus 1.23MT in April 2018, a drop of 23.5 percent, suggesting plant maintenance work in the region at a time when there was also a reported outage of the Qatar-UAE Dolphin Energy natural gas pipeline.
The last time monthly shipments from the Middle East dropped under the 1MT level was in 2005 when they regularly totaled between 950,000 to 970,000 tonnes in the second quarter of the year.
Asian LNG shipments cargo deliveries increased by 12.4 percent to 1.47MT from nations such as Malaysia and Indonesia, Papua New Guinea and Brunei.
US deliveries amounted to 138,000 tonnes, the equivalent of two large cargoes while one delivery was received in the same month a year ago.
Monthly Russian shipments from the Sakhalin Island plant in the Far East amounted to 404,000 tonnes, a fall of 13.9 percent versus 2018.
The balance of imports from Australia, African nations and the spot market amounted to 2.66MT, a 32 percent rise compared with the 2.02MT received in April 2018.
Japanese LNG imports had declined by 0.9 percent in 2018. The 2018 imports amounted to 82.85MT versus 83.63MT received in 2017.
Japan’s 2018 import bill was 20.8 percent higher than in 2017 at 4,730Bln yen ($43.14Bln). The Japanese had paid 19.3 percent more in 2017 compared with the previous year with an LNG bill of 3,915Bln yen ($35.58Bln).
