LNG

Abu Dhabi National Oil Co. (ADNOC), the main oil and gas company of the United Arab Emirates, has as expected made a final investment decision to build a second LNG export plant sited in the industrial city of Ruwais and has also awarded engineering contracts.

A South Korean trade agreement with the United Arab Emirates has been signed in Seoul and included a future order for at least six LNG carriers from the UAE and a pledge of $30 billion of investments in Korean industries.

ADNOC Gas, the energy company in Abu Dhabi in the United Arab Emirates, plans to invest $13 billion in domestic and international opportunities in the next five years and aims to more than double its LNG production capacity by 2028.

The Japan Bank for International Cooperation (JBIC) has signed an agreement with Abu Dhabi National Oil Co. (ADNOC) to proceed with further discussions for financing under the bank’s decarbonisation programme as ADNOC and a subsidiary have also pledged to continue supplying LNG to the Japanese along with long-term crude oil supplies.

“ADNOC is a leading energy company wholly owned by the Emirate of Abu Dhabi with a clear intent to decarbonise its operations,” said JBIC.

“It has ambitions of achieving net zero emissions by 2045, promoting renewable energy, hydrogen and ammonia, carbon capture and storage (CCS), and other green energy initiatives,” explained JBIC in regard to the leading energy company in the United Arab Emirates.

“The heads of agreement is intended to aim at building a consensus in which JBIC will provide a credit line to ADNOC under ‘green operations’ to support projects related to decarbonisation and the energy transition implemented by ADNOC or its subsidiaries,” the state-owned Japanese bank added.

Carbon-capture and storage (CCS) is a technology that separates and captures CO2 that would otherwise become a greenhouse-gas and stores it in deep-water caverns or other geological formations.

ADNOC spin-off

ADNOC Gas, which was spun-off in March 2023 to become a separate company, is estimated to have the seventh-largest gas reserves globally and has signed supply agreements with Japanese companies.

The latest was signed in October 2023 with the trading subsidiary of Japan's power generation company Jera Co. Inc.

The multi-year agreement with Jera Global Markets, a utility-backed energy trader specialising in LNG and other fuels, builds on the energy partnership between the UAE and Japan.

The ADNOC gas subsidiary also signed a five-year LNG supply agreement with Japan Petroleum Exploration (JAPEX) in August 2023.

JBIC noted that in addition to supplying LNG to Japanese import terminals the UAE emirate of Abu Dhabi was also key and long-term supplier of oil to Japan.

“As a stable and important supplier of crude oil to Japan for more than 40 years, Abu Dhabi is a strategic partner and a very important ally for Japan's energy resources strategy,” said JBIC.

High potential

“In addition, Abu Dhabi has high potential in the sector of decarbonisation and energy transition as it has abundant resources for renewable energy and subterranean structures suitable for CCS,” JBIC explained.

“The credit line under the HOA aims to support ADNOC’s initiatives for decarbonisation and to create opportunities for collaboration between Japanese companies and ADNOC, and it is expected to contribute towards realising the decarbonised societies that Japan and Abu Dhabi are aiming for,” JBIC declared.

As Japan's policy-based financial institution, JBIC said it would continue to provide financial support for sustainable development efforts, including those for global environmental preservation, by drawing on its various financial facilities for structuring projects financially and by “performing its risk-assuming” function.

JERA Global Markets, the trading arm of Japan’s largest LNG and energy buyer and utility JERA Co. Inc., and ADNOC Gas, the recently spun-off unit of Abu Dhabi National Oil Company (ADNOC) in the United Arab Emirates, have signed a multi-year LNG supply agreement. 

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.

Israel has suspended production at the Tamar natural gas field supplying Israel, Jordan and Egypt offshore the East Mediterranean coast and not far from the Gaza strip after the terrorist attacks against Israeli civilians over the weekend that have spread regional instability and affected natural gas prices more than crude oil prices.

Saipem, the Italian energy and LNG engineering company specializing in subsea work, has signed a letter of award with Abu Dhabi National Oil Company (Adnoc)  for a new contract related to the Hail and Ghasha natural gas development project in the United Arab Emirates.

Saipem said its share of the contract amounts to around $4.1 billion and has been awarded in consortium with the Abu Dhabi-based National Petroleum Construction Company (NPCC).

The project is aimed at developing the resources of the Hail and Ghasha natural gas fields, located offshore Abu Dhabi.

The fields lie in the Ghasha Concession block in water depth of around 328 feet and are expected to start commercial production in the next couple of years.

Saipem said the project scope of work encompassed the engineering, procurement and construction (EPC) of four drilling centres and one processing plant to be built on artificial islands, as well as various offshore structures and more than 300 kilometres (187 miles) of subsea pipelines.

Integrated

“The award is in line with Saipem’s unique capability to deliver integrated onshore and offshore projects, providing its clients with a single and reliable interface for complex full-field developments,” said the Milan-based company.

“Saipem will leverage on its state-of-the-art shallow water offshore vessels, its advanced welding technology for corrosion resistant materials, as well as its renowned engineering expertise,” Saipem added.

“This award reinforces Saipem’s long-standing relationship with ADNOC and further consolidates the company’s presence in Abu Dhabi, which includes an Engineering and Project Execution Centre, as well as a new Offshore Logistic base in Zayed Port,” Saipem explained. 

ADNOC’s partners in the Hail and Ghasha gas development with a concession term of 40 years include Italy’s Eni, Germany’s Wintershall Dea and Austria’s OMV.

The multi-billion-dollar Hail and Ghasha project is also seen as playing a vital role in meeting the UAE’s gas self-sufficiency objectives.

It also comes at a time when a second UAE LNG production project plant is being developed at Al Ruwais Industrial City. The Ruwais LNG project consists of two 4.8 million metric tonnes annum liquefaction Trains with a total nameplate capacity of 9.6 MTPA.

The existing liquefaction plant on Das Island in the Arabian Gulf currently has export capacity of 6 MTPA. 

Abu Dhabi National Oil Company (Adnoc) has awarded a contract valued at more than 1.47 billion United Arab Emirate dirhams ($400M) to US LNG equipment and technology-maker Baker Hughes for the supply of two all-electric compression systems for the UAE’s planned second LNG export plant to be located at Al Ruwais Industrial City.

The LNG trains will comprise energy efficient Baker Hughes technology, including compressors driven by 75 megawatt electric motors.

 “The Ruwais LNG plant will be the first LNG project in the Middle East and North Africa region to run on clean power, making it one of the lowest carbon intensity LNG facilities in the world,” said a statement.

Innovation

Fatema Al-Nuaimi, Executive Vice President of Adnoc’s Downstream Business, said that as the first clean electricity-powered LNG facility in the Middle East, the Ruwais LNG project reinforced Adnoc’s commitment to innovation.

“The project aligns with Adnoc’s objectives to grow our energy portfolio with lower-carbon solutions, reinforcing our position as a reliable global supplier of natural gas and contributing to enhancing global energy security,” added Al-Nuaimi.

The Ruwais LNG project consists of two 4.8 million metric tonnes annum liquefaction Trains with a total nameplate capacity of 9.6 MTPA.

When completed, it will more than double Adnoc’s LNG production target capacity to meet increased global demand for natural gas.

The existing liquefaction plant on Das Island in the Arabian Gulf currently has export capacity of 6 MTPA.

Baker Hughes and Adnoc announced the award at the ADIPEC oil and gas and energy conference and exhibition in the UAE.

The US company, which will book the Adnoc order in fourth-quarter earnings, said the two LNG Trains would be driven by the Baker Hughes BRUSH electric motor technology and feature the company’s world-class compressor system.

Portfolio

“This award represents an important milestone for Baker Hughes in the LNG market and demonstrates the strength of our portfolio, which we strategically expanded through the BRUSH Power Generation acquisition in 2022,”  explained Ganesh Ramaswamy, Executive Vice President of Industrial & Energy Technology at Baker Hughes. 

“Over the next decade, electrification will play a critical role in the energy transition, enabling further reduction of the carbon emissions footprint of natural gas,” added Ramaswamy.

“We are incredibly honored that Adnoc Gas, for and on behalf of Adnoc, has chosen Baker Hughes as a trusted partner to support their vision to increase LNG production while further decarbonizing their operations,” Ramaswamy stated.

Baker Hughes noted that the award continued the positive demand momentum in 2023 for the company’s gas technology equipment portfolio after securing several major LNG orders throughout the year. 

DP World, a leading ferry and freight provider, has launched the first large-scale direct freight service between the United Arab Emirates and Iraq to make the flow of goods between the two countries faster, safer and more efficient and cutting delivery times to 36 hours by ferry from 14 days by land.