Adnoc buys 10% in LNG project in Mozambique

Alamy via Reuters

• LNG production capacity of 25 mtpa
• Deal with Portugal’s Galp Energia
• Concession includes floating LNG facility

Abu Dhabi National Oil Company (Adnoc) has acquired a 10 percent stake from Portugal’s Galp Energia in the Rovuma basin concession in Mozambique as part of its global growth strategy. 

The acquisition will allow the UAE energy major a share of the liquefied natural gas (LNG) production from the concession, which has a combined production capacity of more than 25 million tonnes per annum (mtpa).

The value of the deal was not disclosed.

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The Area 4 concession includes the operational Coral South Floating LNG (FLNG) facility, the planned Coral North FLNG development, and the proposed Rovuma LNG onshore facilities. 

FLNG is a technology that makes natural gas production, liquefaction and storage possible at sea.

Adnoc’s first investment in Mozambique aligns with its expansion strategy for a lower-carbon LNG portfolio.

Earlier this week, the UAE energy company announced the acquisition of an 11.7 percent stake in the first phase of the US LNG developer NextDecade’s $18 billion Rio Grande export facility in Texas. The investment is its first LNG deal in the US.

Adnoc has acquired the equity stake through an investment vehicle of investor Global Infrastructure Partners and has also secured an option for equity participation in the second phase of the scheme.

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It has also signed a 20-year LNG offtake deal with NextDecade for 1.9 mpta of LNG from the second phase of the development, which is subject to a final investment decision.

Musabbeh Al Kaabi, Adnoc’s executive director for low-carbon solutions and international growth, said natural gas plays an important role in meeting growing global demand for lower emissions than other fossil fuels. 

Rio Grande LNG is the first US LNG project to offer an expected emissions reduction of more than 90 percent through its carbon capture storage project. 

The Coral South development, currently in operation, can produce up to 3.5 mtpa of LNG. The proposed Coral North development will likely produce a further 3.5 mtpa of LNG for exports through an FLNG facility.

Rovuma gas basin

Mozambique’s Rovuma gas basin is one of the world’s largest gas discoveries in the past 15 years. It holds proven reserves to provide a stable natural gas supply to FLNG and onshore facilities. 

The latest acquisitions support Adnoc’s strategy to build an integrated global gas, petrochemicals, and renewables business.

Al Kaabi, formerly chief executive of Mubadala Petroleum, is central to this expansion. 

In April, Adnoc Gas announced plans to invest $13 billion in domestic and international growth over the next five years.

It already exports LNG from UAE’s Das Island and is developing an LNG plant in Ruwais.

The energy giant has also invested in Azerbaijan’s Absheron gas and condensate field in the Caspian Sea, which began production last July. 

Andoc-BP joint venture

Adnoc has entered a 49-51 percent joint venture with the UK-based BP covering a number of gas exploration and production interests in Egypt. 

Ahmed Alebri, Adnoc Gas’s chief executive, said the company was targeting opportunities in Europe, India, China, and Southeast Asia.

Energy companies have increased their interest in LNG as the global demand for the fuel grows. LNG is less carbon-intensive than coal or gasoline.

This year Saudi Aramco completed the $500 million acquisition of a minority stake in MidOcean Energy, an LNG company in the US formed by EIG Global Energy Partners, the American investment firm.

The company is holding discussions about investing in the second phase of Sempra Infrastructure’s Port Arthur LNG project in Texas.