Adnoc Gas signs $450 million LNG agreement with Japan's Jera

LNG will be supplied from the Adnoc subsidiary’s Das Island liquefaction facility

Japan has secured long-term LNG contracts from the US, Australia and the Middle East. Photo: Adnoc

Adnoc Gas has signed a $450 million agreement with Jera Global Markets, the trading division of Japanese utility Jera, to supply liquefied natural gas from 2025 to 2028, strengthening the LNG relationship between the two entities.

The LNG will be supplied from the company’s Das Island liquefaction facility, which has a production capacity of about 6 million tonnes per annum, Adnoc Gas said in a statement on Monday.

“This agreement builds on the robust UAE-Japan energy relationship and decades of collaboration between Adnoc Gas and Jera,” said Fatema Al Nuaimi, chief executive of Adnoc Gas.

“We will continue to support Japan’s energy needs and reinforce our position as a reliable partner in the global LNG market.”

Fatema Al Nuaimi, chief executive of Adnoc Gas, and Hisaki Endo, managing director of group co-ordination at Jera Global Markets, signed the agreement. Photo: Adnoc

Japan, which is the world’s fourth-largest economy and second-biggest LNG importer, has been securing long-term LNG contracts from the US, Australia and the Middle East.

Last year, Adnoc signed an initial agreement with Osaka Gas, one of the largest utility companies in Japan, for the delivery of up to 800,000 tonnes per annum of LNG.

In 2023, Adnoc Gas signed a multi-year agreement to supply LNG worth between $500 million and $700 million to Jera Global Markets. The latest deal builds on that agreement, Adnoc Gas said, without providing further details.

This latest agreement, building upon a similar 2023 supply agreement, further cements the legacy of collaboration between the UAE and Japan, reflecting Adnoc Gas's role as a preferred LNG supplier to key global markets.

Global demand for the fuel is projected to rise by more than 50 per cent by 2040, as industrial coal-to-gas switching gathers pace in China and South Asian and South-East Asian countries, Shell said in its LNG outlook report last year.

LNG trade worldwide reached a record high in 2022, when Russia’s invasion of Ukraine triggered a scramble for the fuel in Europe. However, agencies and experts expect the LNG market to go into a glut in the second half of the decade as new supply comes online from the US and Qatar – two of the largest suppliers.

“This supply agreement with our long-standing partner Adnoc Gas reflects the active measures we take to ensure that our global portfolio remains diverse, flexible, and competitive,” said Kazunori Kasai, chairman, Jera Global Markets.

The Abu Dhabi-based company, which has access to 95 per cent of the UAE's natural gas reserves, supplies customers in the Emirates through an extensive network of pipelines. It also seeks to grow exports of products such as LNG, liquefied petroleum gas and naphtha.

In November, Adnoc Gas boosted its capital expenditure target in response to a projected surge in natural gas demand within the UAE. The Adnoc subsidiary plans to spend up to $15 billion from 2025 to 2029, an increase from its previous target of $13 billion.

The company is also set to acquire Adnoc’s 60 per cent stake in the Ruwais LNG plant in the second half of 2028 for up to $5 billion.

The project, which will comprise two 4.8 mtpa LNG liquefaction trains with a total capacity of 9.6 mtpa per annum, will more than double Adnoc's existing LNG production capacity in the UAE to about 15 mtpa.

Earlier this month, Adnoc Gas awarded three contracts worth $2.1 billion to grow infrastructure supporting Ruwais LNG.