UAE’s ADNOC to expand gas processing with $3.6 billion contract

DUBAI — Abu Dhabi National Oil Company’s gas entity, ADNOC Gas, said on Wednesday it awarded a $3.6 billion contract to expand its gas processing infrastructure in the United Arab Emirates (UAE). ADNOC noted that the majority of the deal's value will "flow back into" the country’s economy, which the state-owned oil giant has been working to develop via major moves to establish assets and investments with global partners.

ADNOC Gas announced it would award the contract to a joint venture between the National Petroleum Construction Company — owned by state fund ADQ — and Spain’s Tecnicas Reunidas, according to a company press statement on Wednesday. The deal aims to produce new gas processing facilities to enable an optimized supply to the Ruwais Industrial Complex in the capital’s western region of Al Dhafra.

As part of the project, ADNOC Gas aims to raise ethane extraction by up to 40% from its existing onshore facilities in the Habshan complex. It also plans to “unlock further value” from existing feedstock and deliver it through a 75-mile (120-kilometer) natural gas liquids pipeline.

More than 70% of the award value will be injected back into the UAE’s economy, the press statement added.

Ahmed Mohamed Alebri, the CEO of ADNOC Gas, said his company will funnel this value to the Emirates’ economy using the In-Country Value (ICV) program, a governmental program implemented by the UAE Ministry of Industry and Advanced Technology geared to aid the local economy’s diversification and growth through developing local industries and services, creating private sector job opportunities and more. 

“The expansion of our gas processing infrastructure will also provide additional energy to the country’s growing industrial section while stimulating economic growth and diversification through the significant ICV generated by the contract,” Alebri said in the Wednesday release.

This falls in line with parent company ADNOC’s ambition to lead the UAE capital’s aspirations as a critical financier of the entire national program by building its assets — particularly international ones.

ADNOC is assembling a nearly 50-member team of Wall Street dealmakers and is going after an estimated $50 billion in transactions in efforts to diversify and expand its business abroad, The Financial Times reported on Wednesday, citing unnamed sources. 

This is part of a strategy driven by Sultan Al Jaber — who has led ADNOC since 2016 — to pursue multibillion-dollar acquisitions, including in the non-oil sector, the Financial Times added.  His investment team is run by former senior Morgan Stanley executive Klaus Froehlich and is pursuing a number of major deals with Brazilian petrochemical maker Braskem, Austria’s OMV and also German chemical company Covestro. 

ADNOC can be characterized commercially as an asset management company with an enhanced focus on partner management, the president of Competitive Energy Strategies Gerald Kepes wrote in an Al-Monitor Pro memo this week. ADNOC’s international asset holdings have also recently expanded, entering new “Eastern Mediterranean and Central Asian upstream gas arenas and stepped-up efforts to acquire petrochemicals and energy-efficient materials businesses outside the Middle East,” he added. 

ADNOC acquired a 30% stake in the Absheron gas field in the Caspian Sea after signing a deal with Azerbaijan’s state energy company, SOCAR, and France’s TotalEnergies last Friday. After the transaction is complete, SOCAR and TotalEnergies will own 35% of the field each. 

Also on Aug. 1, the state oil giant and US-based Occidental Petroleum announced a strategic collaboration agreement to explore potential investment opportunities in carbon dioxide capture and storage hubs in the UAE and the United States. Enabled by the UAE-US Partnership for Accelerating Clean Energy (PACE) established in November 2022, the agreement is set to help the two countries accelerate $100 billion in clean energy and carbon management projects by 2035. 

Yet with a moderate level of operational autonomy to choose investment, project and sector partners, ADNOC is still limited by its high dependence on the capabilities of international oil companies such as asset leaders from BP and ExxonMobil, along with service companies, financial advisers, and investment bankers and consultants, noted Kepes. 

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