Adnoc Gas to set aside fifth of Ruwais LNG output to meet spot Asian demand

Adnoc Gas will keep about 20 per cent of planned output from its Ruwais liquefied natural gas plant uncontracted to capitalise on global LNG price swings.

The 9.6 million tonne per annum Ruwais LNG project, which is to come on stream by the fourth quarter of 2028, has already contracted over 8 mtpa of its output, equivalent to 83 per cent of planned capacity - in long-term deals. That includes a 15-year award to Shell last month for one mtpa of the super-chilled fuel and a one mtpa 15-year contract with Indian Oil signed in August.

Adnoc Gas is "having a buffer or foundation of long-term contracts but then the 20 per cent that remains, or even less today, [can be used to] benefit from the ups and downs [of the markets]", chief executive Fatema Al Nuaimi told The National.

“I think it's healthy to keep that remaining percentage for an opportunistic approach in terms of taking advantage of the market's movement,” added Ms Al Nuaimi, who was previously chief executive of Adnoc LNG.

Ruwais LNG, in which Adnoc Gas will have a 60 per cent stake upon completion, is set to come on stream “on time ... and we are progressing as per the plan today", she said. BP, Shell, TotalEnergies and Japan’s Mitsui each hold a 10 per cent interest in the project.

She countered industry projections of an impending global LNG glut and noted that supply expansion forecasts assume every new project in countries including the US, Qatar and Mozambique “arrives on time”. This is “rarely” reflected in real-world implementation. “The supply usually comes in a step change,” Ms Al Nuaimi added.

"So you will see a surge of projects coming or commissioned at the same time, which creates an imbalance at a certain point of time. This automatically [puts] some kind of pressure on prices," she said.

About 300 billion cubic metres per year of new LNG export capacity will be added worldwide by 2030 as planned expansions accelerate in the US and Qatar, the International Energy Agency said in its five-year Gas Outlook report, published in October.

Next year, the agency expects LNG supplies to rise by 7 per cent, or 40 bcm, marking the largest increase since 2019 on the back of new projects. Demand is also expected to keep up with new supplies and is forecast to rise 2 per cent in 2026.

“This [2026] is the time when prices go into a reasonable lower range that makes LNG an attractive alternative,” Ms Al Nuaimi said. “It is the switching point where people switch from coal to LNG. This justifies for some of the consuming nations, especially in Asia, to invest in infrastructure to receive energy."

She expects Asian markets to fuel demand for spot cargoes from Adnoc LNG “unless the arbitrage is really, really encouraging on the other side for this available spot market", she said.

Her remarks come a week after President Sheikh Mohamed approved Adnoc’s $150 billion five-year spending plan, which earmarked $20 billion for gas alone.

Adnoc unveils $150bn expansion drive as UAE boosts oil and gas