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UAE Plans to Double LNG Exports in Oil, Natural Gas Expansion

The United Arab Emirates’ (UAE) plans to build a second LNG export facility and become a regional exporter are gaining momentum as European leaders recently visited the Middle East to discuss replacing Russian energy imports.

The proposed two train 9.5 million metric tons/year (mmty) project is to be located at the busy oil port of Fujairah on the Gulf of Oman, outside the Strait of Hormuz choke point, a strategic site to deliver LNG to Europe, along with North and South Asia.

State-owned Abu Dhabi National Oil Co. (Adnoc) has changed its marketing tactics since building its 1st LNG export plant on Das Island in 1977. Prior to 2019, about 90% of Das Island LNG exports were delivered to Japan. In 2019, ADNOC diversified its supply portfolio, signing on several clients including Vitol, TotalEnergies SE and other buyers in South Asia, Japan and China.

Along with the 6 mmty Das Island facility, the new project would more than double the UAE’s LNG capacity.

Adnoc has high ambitions to develop its oil and gas production. Last December, at Adnoc’s annual board meeting, plans to double LNG production from 6 to 12 mmty capacity was included as part of a $127 billion spending plan for 2022-2026.

The plan is aimed at better developing the country’s huge oil and gas reserves, including the expansion of its Shah Gas field project, and spending nearly US$20 billion on other large gas developments.

The “potential expansion of Adnoc’s LNG production capacity is underpinned by the growth in its natural gas position, with new developments planned to add 3 Bcf/d of gas and more to come from associated gas as it expands its crude oil production capacity,” Adnoc said late last year.

“Additional LNG exports will no doubt represent a key source of revenue for the UAE,” Fatima Sadouki, a Middle East energy specialist told NGI. In the domestic market, Sadouki said the country is looking to reduce gas consumption with low-carbon alternatives, “notably through the start-up of the Barakah nuclear plant and other major solar energy projects.”

Although a final investment decision has yet to be reached for the proposed Fujairah LNG facility, engineering companies KBR Inc., Fluor Corp., McDermott International Ltd., Technip Energies, JGC Holdings Corp. and Chiyoda Corp. submitted bids in late March for the front-end engineering and design contract, according to local news media.

To support the country’s future LNG plans, the company’s shipping arm, Adnoc Logistics & Services, recently ordered two newbuild 175,000 cubic meter LNG carriers to join its fleet in 2025.

“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 segment’s management said.

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Posted on :5/5/2022