Adnoc Gas considers M&A deals to meet LNG demand

Reuters/Marcus Brandt

• Company says it has the funds
• Capex plans up by $2bn
• Net income up by 11%

Adnoc Gas is looking at international acquisitions and mergers to cope with what it predicts will be strong demand for liquefied natural gas (LNG) in the next decade, a senior executive said on Monday.

“We have the balance sheet to do it, so if there is an opportunity, we will definitely consider it,” chief financial officer Peter Van Driel said. 

However, Van Driel said, “it has to be better in terms of returns and risk profile” than what the company has today in the UAE.

Adnoc Gas, a subsidiary of Abu Dhabi National Oil Company (Adnoc), has increased its capital expenditure plans to $15 billion by 2029, from an earlier forecast of about $13 billion. 

This is designed “to capture opportunities from the forecast increase in domestic and global demand for the lower carbon gases we produce,” said Ahmed Mohamed Alebri, CEO of Adnoc Gas.

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On Monday the company announced plans to expand its LNG export capacity by acquiring 60 percent of the Ruwais LNG plant from Adnoc. The transaction, expected to be conducted at cost in the second half of 2028, is estimated at about $5 billion.

The Ruwais LNG plant will more than double Adnoc Gas’s current gross 6 million tonnes per annum (mtpa) LNG capacity, operated from Das Island, to reach more than 15 mtpa.

Adnoc Gas recorded a solid financial performance in the year’s third quarter. Its net income rose by 11 percent year on year to $1.24 billion, while revenue increased by 8 percent year on year to $6.28 billion.

By 2029, the company forecasts a 40 percent growth in Ebitda (earnings before interest, tax, depreciation and amortisation), to $10.6 billion, from $7.6 billion in 2023.

It plans to increase its processing capacity to 13.3 billion cubic feet (bcf) by 2029, from 10.2 bcf in 2023 as it invests in new gas projects, including rich gas development and the Bab gas cap. It expects to reach a final investment decision in 2025 for the former and 2026 for the latter.

Rich gas development is extracting natural gas that contains heavier hydrocarbons than lean gas, with output expected to increase as Abu Dhabi raises its oil production capacity to more than 5 million bpd by 2027. The Bab field is an onshore concession, where Adnoc Gas is developing a new 1.9 billion cfd processing plant. 

Hungry for gas

Van Driel said: “The market is hungry for gas. We expect demand for gas to continue to grow on domestic and international levels.”

In 2040, Asia Pacific is likely to contribute to 70 percent of global LNG demand, according to the company. “This is a key market for our energy products,” said Van Driel.

Two thirds of Adnoc Gas’s revenues come from international sales, while the domestic market generates one third.

Adnoc Gas forecast in its third quarter financial results that the domestic market would grow by 6 percent in the next seven years.

“Data centres and artificial intelligence will be the key source of growth,” said Van Driel. The company estimates that the AI revolution will increase global LNG demand by about 13 percent by 2030.

Adnoc Gas’s share price rose 1.5 percent to AED3.39 on Monday.