How UAE's Adnoc is building a gas strategy beyond the Strait of Hormuz

On Friday, July 31, satellite imagery revealed a liquefied natural gas (LNG) tanker docking at Adnoc’s Das Island terminal, according to Bloomberg. This image highlighted ongoing efforts by the United Arab Emirates' national oil and gas company to expand its gas strategy beyond the strategic Strait of Hormuz. Despite persistent regional risks, Adnoc continues to ensure critical gas supplies reach its customers. However, the company is pursuing additional initiatives aimed at maximizing its gas reserves. Adnoc and its partners made the final investment decision on a $6.2 billion project to develop the gas cap of the Umm Shaif field on July 21. This field, discovered off Abu Dhabi in 1958, presents unique challenges due to the presence of gas overlying oil. The project aims to produce 600 million cubic feet per day (mmcfd) of gas without affecting reservoir pressure or oil recovery. Earlier, on June 28, Adnoc issued a tender for engineering work related to the gas cap of the Bab field, another key onshore asset. A consortium including BP, TotalEnergies, China National Petroleum Corporation, Zhenhua Oil, Inpex, and GS Energies was formed shortly before that date. The Bab gas cap is projected to generate 1.5 mmcfd. In addition, Adnoc launched a dedicated platform for global LNG marketing and trading on July 10, coordinating operations among Adnoc Gas, Adnoc Trading, and its international division, XRG. This initiative underscores the company’s growing ambition in the global LNG market. The company is also advancing the multi-stage development of the Ghasha, Hail, and Dalma offshore fields, aiming for 1.8 mmcfd of daily gas production. These projects were supported by $11 billion in financing secured in December. Progress is also underway on the Diyab unconventional gasfield, targeting 1 billion mmcfd of daily output. There are indications that a final investment decision on Diyab could be reached by year-end. Additionally, there are plans to expand the Shah gasfield by 0.4 mmcfd and implement the $5 billion "Rich Gas Development" to process 1.5 mmcfd of associated gas as oil production increases. If all these projects proceed, they could increase national gas output by approximately 6.8 mmcfd, adding significantly to the current estimate of 5.67 mmcfd from the Energy Institute. The UAE’s decision to exit Opec in May has played a pivotal role in enabling these developments. Balancing oil and gas production from fields such as Bab and Umm Shaif becomes more complex under Opec’s production constraints. The Rich Gas Development also relies on increased oil output. Adnoc’s goal is to achieve self-sufficiency in gas by 2030. Currently, the UAE imports around 1.7 mmcfd of gas daily from Qatar via the Dolphin pipeline, a contract set to expire in 2032. Renewal terms remain uncertain, though prices are expected to rise compared to the favorable rates negotiated in 2003. Some of the newly extracted gas will support the Ruwais LNG plant, originally slated for completion by late 2028. Most of its output is already committed under long-term contracts, with recent agreements signed with Inpex. In a surprising announcement in June, Adnoc revealed plans to construct a new LNG export facility at Fujairah, located outside the Strait of Hormuz. This move reflects a broader strategy to diversify export routes and reduce dependency on traditional corridors. Meanwhile, industrial activities at Ruwais continue to advance. Ahmed El Hoshy, CEO of fertiliser subsidiary Fertiglobe, noted that the company has redirected sales through road and rail to ports outside the Gulf. This shift enabled the export of 56 percent of UAE output during the second quarter. The Ta’ziz chemicals cluster has also entered into multiple agreements to produce essential raw materials, enhancing the country’s product diversity and supporting more advanced manufacturing processes. The success of the UAE’s nuclear and solar energy programs is expected to decrease reliance on gas for electricity generation. Conversely, the rapid growth of data centers will drive increased demand for power. These factors underscore the evolving dynamics shaping Adnoc’s future strategies in the gas sector.