Adnoc awards $5.5bn contract to build low-carbon LNG project in Ruwais

The engineering, procurement and construction contract was won by a joint venture comprising Technip Energies, JGC Corporation and NMDC Energy

Adnoc is looking to position itself as a major player in the LNG market. Reuters

Adnoc has approved the construction of a low-carbon liquefied natural gas project and awarded an engineering, procurement and construction contract valued at about $5.5 billion.

The project in Al Ruwais Industrial City, in Abu Dhabi's Al Dhafra region, will be the first LNG export complex in the Mena region to run on clean power, Adnoc said on Wednesday.

The EPC contract was awarded to a joint venture comprising Technip Energies, JGC Corporation and NMDC Energy. The LNG plant will have one of the world’s lowest carbon intensity rates.

Sheikh Khaled bin Mohamed, Crown Prince of Abu Dhabi, endorsed the final investment decision for the project as he chaired a meeting of the executive committee of the Adnoc board of directors.

The project will feature two LNG liquefaction trains, each with a capacity of 4.8 million tonnes per annum, totalling 9.6 mtpa.

This will more than double Adnoc's current LNG production capacity in the UAE to about 15 mtpa as the company expands its international LNG portfolio.

The project will also use artificial intelligence and the latest technology to enhance safety, minimise emissions and drive efficiency, Adnoc said.

As part of this strategy, Adnoc is banking on its portfolio of low-carbon energy while hastening the integration and use of AI solutions across its value chain to unlock further value, reduce emissions and keep people safe.

Sheikh Khaled said the project would strengthen Adnoc’s position as a reliable natural gas supplier around the world, and accelerate the development of Al Ruwais Industrial City by attracting investment and boosting the local industrial ecosystem.

It will use specialised equipment and materials sourced from the UAE, with 55 per cent of the EPC contract value benefitting the country's economy under Adnoc's In-Country Value programme.

This is expected to promote economic growth and industrial development, as well as create skilled jobs for Emiratis.

The UAE's ICV programme, headed by the Ministry of Industry and Advanced Technology, is part of the UAE's Projects of the 50 initiative that aims to boost the growth of domestic industries by redirecting half of government spending on procurements and tender contracts into the national economy by 2031.

Adnoc, responsible for almost all of the UAE’s oil production, is looking to position itself as a major player in the LNG market as demand for the supercooled fuel is expected to grow over the next few decades.

Last month, the company acquired a 10 per cent stake in Portuguese energy company Galp’s Area 4 concession of the Rovuma Basin in Mozambique, marking its first investment in the African country.

The acquisition entitled Adnoc to a share of LNG production from the concession, which has a combined production capacity of more than 25 mtpa.

The company also acquired a 11.7 per cent stake in phase one of NextDecade’s Rio Grande LNG project in Texas, marking its first investment in the US.

LNG is seen as a cleaner alternative to other fossil fuels and economies are hoping to grow the share of natural gas in their energy mix.

Its demand is expected to grow by more than 50 per cent globally by 2040, according to Shell's LNG Outlook report released in February.

This jump will be boosted by China's industrial coal-to-gas switching and the increased use of LNG by South Asian and South-East Asian countries to support their economic growth.

LNG trade is expected to surge to between 625 mtpa and 685 mtpa by 2040, from 404 mtpa last year, the report said.