Adnoc Gas has signed a three-year supply agreement with TotalEnergies Gas and Power, a subsidiary of France’s TotalEnergies, for the export of liquefied natural gas (LNG) as demand for less polluting fuel picks up globally amid decarbonisation efforts.
The contract is expected to start this year and will run through 2025, Adnoc Gas said in a statement on Monday to the Abu Dhabi Securities Exchange, where its shares are traded.
The value of the agreement is expected to be $1 billion to $1.2 billion under current market conditions.
“Our new LNG supply agreement with TotalEnergies represents another significant milestone in our strategy to expand our global reach and strengthens our position as the LNG export partner of choice for leading global energy businesses,” said Ahmed Alebri, chief executive of Adnoc Gas.
“This agreement reflects our commitment to meeting the needs of our customers by offering supply security, price competitiveness and flexibility.”
LNG is natural gas that turns into a colourless and non-toxic liquid when cooled to about minus 162°C (minus 260°F). The cooling process shrinks the volume of the gas, making it easy to ship and store.
It can be used for cooking and heating, as a fuel for commercial vehicles, generating electricity and manufacturing products such as fertiliser, paint and medicine.
The long-term demand for LNG is expected to double to 700 million tonnes by 2040 as the world consumes more gas to offset polluting fuels such as coal, Anglo-Dutch major Shell said in an annual outlook in 2020.
Global trade in LNG rose 6 per cent to 380 million tonnes in 2021 on the back of higher demand from China and South Korea, Shell said last year.
"These additional volumes will strengthen our global LNG portfolio, our ability to supply the growing Asian markets and our ambition to accompany our customers in their energy transition,” said Thomas Maurisse, senior vice president of LNG at TotalEnergies.
Adnoc Gas, a unit of Adnoc, has access to 95 per cent of the UAE's natural gas reserves, estimated to be the seventh-largest globally. It also supplies more than 60 per cent of the UAE's gas needs.
Earlier this year, Adnoc raised about Dh9.1 billion ($2.5 billion) from the sale of a 5 per cent stake in Adnoc Gas.
The company sold more than 3.8 billion shares, with the IPO drawing strong demand from institutional and retail investors, and generating more than $124 billion in orders.
