Adnoc Gas, the integrated gas processing unit of Adnoc, has awarded contracts worth $500 million for the next phase of the UAE's gas pipeline expansion, while also transferring the ownership of the project to its parent company.
The engineering, procurement and construction contracts for the UAE sales gas pipeline network enhancement project, called Estidama, were awarded to NMDC Energy and Galfar Engineering & Contracting W. L. L Emirates, Adnoc Gas said on Monday in a statement on the Abu Dhabi Securities Exchange, where its shares are traded.
Meanwhile, the ownership transfer to Adnoc will help in “significantly optimising Adnoc Gas’s capital efficiency”, it said.
Adnoc Gas will continue to manage Estidama with Adnoc covering the capital expenditure for the infrastructure project.
Estidama will extend the pipeline network from approximately 3,200km to more than 3,500km, and enable the transportation of higher volumes of natural gas to the northern emirates.
The project will bring “lower-cost and sustainable natural gas to more locations across the country”, said Ahmed Alebri, chief executive of Adnoc Gas.
The company is playing a “leading role in meeting the growing demand for gas across the country and enabling the UAE’s goal of gas self-sufficiency”, he added.
Adnoc Gas will be paid to operate and maintain Estidama on behalf of Adnoc and will pay its parent a variable transmission fee for actual throughput of the pipeline.
In April, Adnoc Gas said it plans to invest more than $13 billion until 2029 to pursue domestic and international growth opportunities amid expansion of its liquefied natural gas (LNG) production capacity.
The company aims to more than double its LNG output capacity by 2028 through the strategic acquisition of the new Ruwais LNG plant from parent company Adnoc and potentially target assets in Europe, India, China and South-east Asia, Adnoc Gas said.
The Ruwais project will more than double Adnoc's UAE production capacity of LNG to about 15 million tonnes per annum.
Currently under development in Abu Dhabi’s Al Ruwais Industrial City, it will consist of two 4.8 million tonnes-per-annum LNG liquefaction trains with a total capacity of 9.6 million tonnes per annum. Start-up is expected in the second half of 2028.
Last week, it was revealed that international energy majors BP, Japan’s Mitsui, Shell and TotalEnergies will each be awarded a 10 per cent equity stake in the Ruwais LNG plant.
“In addition to taking a majority equity stake in Ruwais LNG [from Adnoc], Adnoc Gas will oversee its construction and operate the world-class plant after it is commissioned in 2028,” Mr Alebri told The National at the time.
State-run energy companies in the Middle East are betting big on LNG, seen as a low-carbon alternative to crude oil and coal.
LNG is seen as a cleaner alternative to other fossil fuels, and countries such as India and China are hoping to grow the share of natural gas in their energy mix.
Global LNG demand is projected to increase by more than 50 per cent by 2040, driven by industrial coal-to-gas switching in China and increased LNG use in South Asian and South-East Asian countries to support economic growth, according to Shell’s LNG Outlook released in February.
Adnoc Gas, which has access to 95 per cent of the UAE's natural gas reserves, signed LNG export agreements worth up to $12 billion in 2023.
Last year, it also awarded contracts worth $4.9 billion to expand its processing capacity.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
THE BIO
Ms Al Ameri likes the variety of her job, and the daily environmental challenges she is presented with.
Regular contact with wildlife is the most appealing part of her role at the Environment Agency Abu Dhabi.
She loves to explore new destinations and lives by her motto of being a voice in the world, and not an echo.
She is the youngest of three children, and has a brother and sister.
Her favourite book, Moby Dick by Herman Melville helped inspire her towards a career exploring the natural world.
