LNG

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.

The World Bank said the six members of the Gulf Cooperation Council, including LNG exporters Qatar, Oman and the United Arab Emirates are bouncing back to positive growth from the double blow of Covid-19 and the energy slump, showing the economic resilience of oil and gas.

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.