The Abu Dhabi National Oil Company is making a substantial $62 billion investment in a natural gas development project, aiming to significantly increase domestic production to meet rising demand both locally and globally.
Abu Dhabi National Oil Company (ADNOC) announced in a statement that it has secured financing to develop the gas cap over the Umm Shaif oil and gas field, which is the company's longest-operating offshore field.
The state-owned energy firm stated it will develop this project in partnership with TotalEnergies and Eni. Upon completion, the project is expected to produce over 600 million standard cubic feet of gas per day. ADNOC's current daily gas production capacity stands at 11.5 billion standard cubic feet.
ADNOC's Chief Executive, Sultan Al Jaber, noted that surging global demand for liquefied natural gas is accelerating the company's gas strategy, which will "strengthen ADNOC's position as a reliable global supplier of natural gas."
Concurrently, ADNOC is ramping up production to align with the UAE's own sharply increasing gas consumption. Currently, the UAE imports roughly one-third of its gas via pipeline from Qatar, but that supply agreement is set to expire in 2032, and geopolitical tensions exist between the two nations.
The UAE aims to achieve gas self-sufficiency by the late 2030s, preventing potential energy shortfalls after the Dolphin pipeline from Qatar ceases operations. According to the announcement, the Umm Shaif Gas Cap project is scheduled to begin production in 2030.
For exports, ADNOC is constructing new LNG facilities. By 2028, its LNG production capacity is projected to nearly triple. Construction is already underway on a 9.6 million-ton-per-year LNG plant in Ruwais.
Reports indicate the company also plans to build another LNG facility in Fujairah, on the opposite side of the UAE. This location would be less vulnerable to potential disruptions in shipping through the Strait of Hormuz compared to facilities on the Persian Gulf coast.
ADNOC declined to comment on these potential future plans.
The Umm Shaif Gas Cap project marks ADNOC's first investment in developing a so-called "gas cap" resource. The company has also planned the larger Bab Gas Gap project, with a potential capacity of 1.5 billion standard cubic feet per day, involving partners like TotalEnergies and BP among six major international oil companies. However, financing for that project has not yet been finalized.
Most of ADNOC's gas production currently is associated gas, which has a relatively low extraction cost. As the company pursues more ambitious expansion goals, it is gradually moving to develop gas resources that are more expensive to produce.
The Umm Shaif project will also yield a small amount of crude oil. The UAE exited the OPEC oil producer group in May this year, freeing ADNOC from crude production quotas. This allows the company to invest and expand production without concern for being unable to fully utilize new capacity.
Typically, energy companies avoid developing gas caps early in an oil field's life because extracting the gas reduces reservoir pressure, which can ultimately lead to a decline in crude oil production.
Fraser McKay, Head of Upstream Oil and Gas Analysis at Wood Mackenzie, commented: "While measures can be taken to mitigate pressure depletion, the industry norm is to avoid developing the gas cap early in a field's life. This project presents complex engineering and subsurface geological challenges."
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