International energy companies take 40% stake in Adnoc’s Ruwais LNG project

Adnoc Gas plans to acquire the majority stake in Ruwais LNG from its parent company, its chief executive says

The Ruwais LNG plant will have a total capacity of 9.6 million tonnes per annum. Photo: Adnoc

International energy majors BP, Japan’s Mitsui, Shell and TotalEnergies will each be awarded a 10 per cent equity stake in Adnoc’s Ruwais liquefied natural gas project in Abu Dhabi, boosting the emirate’s status as an energy investment hub and advancing the final investment decision for the facility.

Adnoc will retain a 60 per cent majority stake in the project, which will more than double the company’s UAE production capacity of the supercooled fuel to around 15 million tonnes per annum as it builds its international LNG portfolio, an Abu Dhabi Media Office (Admo) statement said on Wednesday.

Adnoc Gas, the integrated gas processing unit of Adnoc, will acquire the parent company's majority stake in Ruwais LNG, its chief executive told The National, without providing a time frame.

“In addition to taking a majority equity stake in Ruwais LNG, Adnoc Gas will oversee its construction and operate the world-class plant after it is commissioned in 2028,” said Ahmed Alebri.

Adnoc on Wednesday also signed long-term LNG sales agreements with international partners.

That includes a deal for the delivery of one million tonnes per annum with Shell and 600,000 tonnes per annum with Mitsui, bringing the percentage of LNG production capacity that has been committed as offtake agreements to 70 per cent.

The financial value of the deals was not disclosed.

Sheikh Khaled bin Mohamed, Crown Prince of Abu Dhabi, discussed the future of the energy sector with global energy company leaders, emphasising the UAE's progress in tackling energy challenges through investments in clean and lower-carbon projects.

The Ruwais plant, currently under development in Abu Dhabi’s Al Ruwais Industrial City, will consist of two 4.8 million tonnes-per-annum LNG liquefaction trains with a total capacity of 9.6 million tonnes per annum. Start-up is expected in the second half of 2028.

“As natural gas demand continues to increase, this world-class project will enable us to provide more lower-carbon gas to meet growing demand today while helping the world transition to a cleaner energy future,” said Dr Sultan Al Jaber, Adnoc’s managing director and group chief executive.

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 fuel is projected to grow over the next few decades.

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

In the same month, Adnoc also acquired a 10 per cent stake in Portuguese energy company Galp’s Area 4 concession of the Rovuma Basin in Mozambique. The acquisition will give the company access to a share of the LNG production from the concession, which has a combined capacity of more than 25 million tonnes per annum.

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

Global LNG demand is projected to increase by more than 50 per cent by 2040, driven by industrial coal-to-gas switching in China and increased LNG use in South Asian and South-East Asian countries to support economic growth, according to Shell’s LNG Outlook released in February.

“This investment decision builds on our long-standing partnership with Adnoc,” Wael Sawan, Shell’s chief executive said in a separate statement.

“In line with our strategy to create more value with less emissions, we are investing in additional LNG capacity … with energy-efficient and carbon-competitive projects.”

As one of the world’s lowest-carbon intensity LNG plants, the Ruwais facility will allow natural gas to “fully play its role of transition fuel”, added Patrick Pouyanne, chairman and chief executive of TotalEnergies.

In April, Adnoc Gas announced its aim to more than double its LNG output capacity by 2028 through the strategic acquisition of Ruwais LNG, along with potential purchases of assets in Europe, India, China, and South-east Asia.

The company, which has access to 95 per cent of the UAE's natural gas reserves, signed LNG export agreements worth up to $12 billion in 2023.

Last year, it also awarded contracts worth $4.9 billion to expand its processing capacity.

The launch of Ruwais LNG comes amid concerns about a potential glut in the global LNG market, with several large projects set to come online in the next few years.

“We are prepared for any abnormalities in the market itself, especially when we talk about the years beyond 2027,” Mr Alebri said.

He said there are many uncertainties in the market, including whether projects being built in Asia, Australia and the US will be completed on time or delayed.