Shell, TotalEnergies in talks for stakes in ADNOC’s Ruwais LNG plant

(Bloomberg) – Shell Plc and TotalEnergies SE are among several global energy companies in talks to buy stakes in Abu Dhabi National Oil Co.’s next liquefied natural gas export project in the United Arab Emirates.

The two oil majors, as well as Japanese trading house Mitsui & Co., are looking for equity in the Ruwais facility, as well as contracts to purchase LNG from it, according to people with knowledge of the matter. A final investment decision on the project could happen as soon as next month, said the people who asked not to be named as the information is private.

Adnoc doesn’t require investment from the energy companies to move the project forward, and may decide not to sell equity, the people said.

Adnoc and Shell declined to comment. Mitsui said in an emailed response that no decision had been made at this time. Total didn’t immediately respond to requests for comment.

Gas is taking an increasingly bigger role in the Middle East as countries see robust demand for the fuel that may play a bridging role in the transition to cleaner energy sources. The UAE is boosting capacity and Saudi Arabia is seeking projects overseas. Qatar, one of the world’s biggest LNG suppliers along with the U.S. and Australia, is also spending billions of dollars expanding production.

The push, however, clashes with views by the International Energy Agency, which sees gas demand peaking by 2030.

LNG trading. The UAE has also been trying to expand its role as an LNG trader. Shell and TotalEnergies already have vast trading operations, which benefited from the market volatility created in the wake of Russia’s invasion of Ukraine. Demand for the fuel has also increased in Europe as it looked to fill the gap left by dwindling supplies via pipelines from Russia.

The Ruwais project, which is currently fully owned by Adnoc, will have the capacity to export 9.6 million tons of LNG per year, more than doubling the UAE’s total output. Adnoc has signed enough preliminary and final supply agreements for the project to reach a final investment decision, according to one person familiar with the project.

The UAE’s only other LNG export plant, the 5.8 million-ton-a-year Das Island facility, is owned by Adnoc LNG, of which Adnoc, Mitsui, BP and TotalEnergies are shareholders. The project will be pivotal as it tries to expand its role as both a supplier and trader of the superchilled fuel.

Lead image source: Photographer: Christophe Viseux/Bloomberg