UAE's ADNOC Gas takes FID on Rich Gas project

The Emirati firm is progressing on another major gas initiative as it moves ahead with various billion-dollar investments to achieve gas self-sufficiency

WHAT: FID has been taken on the $5bn Rich Gas Development, centring around the Asab, Bu Hasa, Das Island and Habshan gas facilities.

WHY: The contracts are geared towards raising output and improving efficiency at the facilities.

WHAT NEXT: The project is part of ADNOC Gas’ wider $15bn capital expenditure plans by 2029 to deliver a roughly 40% increase in EBITDA.

The gas arm of Abu Dhabi National Oil Co. (ADNOC) has fired the starting gun on its largest-ever capital investment, sanctioning a major project to develop new gas reservoirs critical to boosting LNG exports and fuelling the country’s industrial growth.

The company this week announced it had taken a final investment decision (FID) on the initial phase of its ambitious Rich Gas Development (RGD) project. The move was accompanied by the award of contracts worth a combined $5bn to expand and upgrade processing facilities across its onshore and offshore portfolio.

Gunning for gas

The decision marks a significant escalation in Abu Dhabi’s strategy to monetise its vast gas resources, supporting its goal of gas self-sufficiency and providing essential feedstock for its burgeoning petrochemicals industry. The investment underscores the UAE’s commitment to remaining a pivotal global energy supplier, even as it navigates the complexities of the global energy transition.

The first phase of the RGD project will see a sweeping expansion of key processing units to increase throughput and enhance operational efficiency at four major ADNOC Gas facilities: the onshore sites at Asab, Bu Hasa and Habshan, and the Das Island liquefaction facility offshore in the Persian Gulf.

In a statement on the company’s website, ADNOC Gas CEO Fatema Al Nuaimi hailed the decision as a landmark moment for the company, which was listed on the Abu Dhabi Securities Exchange in a blockbuster initial public offering (IPO) last year.

“The FID and contract awards for the first phase of the Rich Gas Development project mark a significant milestone in ADNOC Gas’ strategy to deliver +40% EBITDA growth between 2023 and 2029,” she said. “This strategic investment is expected to deliver significant new value for our shareholders and enable continued sustainable growth for the company, our employees and the UAE.”

The company has carved the engineering, procurement, construction and management (EPCM) contracts for this first phase into three substantial tranches. The largest, valued at $2.8bn for the extensive Habshan facility, has been awarded to the Aberdeen-based engineering firm Wood.

The remaining two tranches have been secured by two consortia. Petrofac, the London-listed energy services group, and Kent Plc will jointly oversee the $1.2bn upgrade to the Das Island liquefaction facility. The same partnership will also handle the $1.1bn package for the Asab and Bu Hasa facilities.

This initial phase centres on optimising and debottlenecking existing assets to unlock new and valuable gas streams. However, ADNOC Gas has signalled that this is merely the opening gambit. The company intends to take FIDs on two further phases of the RGD project, focused on Habshan and the industrial hub of Ruwais, to deliver greater production capacity to meet rapidly growing domestic and international market demands.

The project is a cornerstone of the company’s long-term growth strategy and aligns with its vision to deliver major initiatives between 2025 and 2029. It also carries a strong emphasis on enhancing In-Country Value (ICV), a government-led programme to diversify the UAE economy.

ADNOC Gas has said it plans to create hundreds of new, field-based technical positions by 2029, contributing directly to the country’s economic development.

This latest spending splurge is part of a wider $15bn capital expenditure plan ADNOC Gas has mapped out through to 2029. Earlier this year, it awarded contracts worth $2.1bn for its new Ruwais LNG facility, located west of Abu Dhabi. Those contracts, covering an LNG pre-conditioning plant, compression facilities and transmission pipelines, are integral to the project which will more than double ADNOC’s LNG production capacity.

The AED20.2bn ($5.5bn) main construction contract for the Ruwais LNG project was previously awarded to a joint venture led by Technip Energies with JGC Corp. and NPCC. The site will feature two large-scale liquefaction trains with a combined capacity of 9.6mn tonnes per year, catapulting ADNOC’s total LNG capacity to approximately 15mn tpy.

Crude complement

While gas development takes centre stage, ADNOC is simultaneously pursuing an aggressive expansion of its crude oil production capacity. In 2023, its subsidiary ADNOC Onshore awarded a major EPCM contract to China Petroleum Engineering & Construction Co. (CPECC), a unit of the China National Petroleum Corp. (CNPC), to manage the expansion of ground facilities at several key oil fields.

ADNOC Onshore is the backbone of the UAE’s crude output, contributing more than half of the company’s 4.2mn barrels per day capacity. This comes primarily from its giant fields at Bu Hasa (650,000 bpd) and Bab and Asab (both around 450,000 bpd).

Following the completion of the four-and-a-quarter-year project, Bab’s capacity is set to rise by 91,000 bpd, while Bu Hasa will add 100,000 bpd to its output. These expansion efforts support ADNOC’s strategic objective of raising the UAE’s total crude production capacity to 5mn bpd by 2027, a target which the company ambitiously brought forward by three years. This comes alongside a target of achieving self-sufficiency in gas production by the end of the decade.

Emissions in focus

Alongside these hydrocarbon expansion projects, parent firm ADNOC is keen to broadcast its sustainability credentials. Late last year, its efforts received a significant boost when the Norwegian classification society DNV certified the technical feasibility of its West Aquifer CO2 storage site. This certification is a key component of ADNOC’s ambitious roadmap to achieve net-zero emissions by 2045.

Santiago Blanco, executive vice president at DNV, commented on the milestone, saying: “This project highlights the vital role that CCS will play in shaping a sustainable energy future.”

ADNOC already operates the Middle East’s first commercial-scale carbon capture, utilisation, and storage (CCUS) facility, Al Reyadah, which currently captures 800,000 tpy of CO2. It has laid out plans for a six-fold increase in this capacity by 2030, targeting 5mn tpy. This is part of a broader initiative to capture CO2 emissions from heavy industrial sources, such as the plants operated by Emirates Steel, and inject it into oil fields to enhance recovery while sequestering the carbon.

The company announced its intention to significantly expand its carbon capture operations in 2023, leveraging the unique geological formations of the UAE to establish the country as a global hub for carbon capture expertise and innovation. This includes new investments to capture emissions directly from the Habshan gas processing facility, which is central to oil, gas and carbon capture initiatives.