Adnoc, Dusup in 15-year gas sales agreement

Dusup manages Dubai's growing gas demand through pipeline and LNG supply

Dubai has seen demand for power grow annually at six per cent. Marwan Naaman / AFP

Abu Dhabi National Oil Company (Adnoc) entered into a 15-year sales agreement with Dubai Supply Authority (Dusup), which runs the emirate's gas importation and distribution infrastructure.

"We will harness our gas resources working in close collaboration with our customers and partners, by making smart investments in the development of additional gas reserves. This will enable us to deliver against our strategic objective of providing a sustainable and economic supply of gas to the UAE," said Adnoc group chief executive Dr Sultan Ahmed Al Jaber in a statement.

The UAE, the Arabian Gulf's second-largest oil producer behind Saudi Arabia, in November announced a spending commitment of Dh400 billion for the next five years to unlock gas caps and pursue downstream integration at home and abroad. Adnoc announced last month that it had awarded front-end engineering and design (Feed) contracts for its offshore ultra-sour gas fields, as the emirate looks to ramp-up gas production to meet growing domestic demand.

UK’s Bechtel was awarded the Feed contract for Hail and Ghasha, while the contract for the Dalma field was awarded to UAE-based TechnipFMC. The Feed study for the mega-project is set to be completed by the end of 2019.

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Dusup manages Dubai's energy needs by buying liquefied natural gas (LNG) on the basis of long-term energy contracts as well as spot cargoes to meet peak demand, particularly during the summer months. It also manages and receives pipeline gas, including the two billion cubic feet a day received through the Dolphin network from Qatar's North Dome gas field.

Last year, the gas supplier signed an agreement with Jera Company, owned by Japanese utility providers Tokyo Electric Power and Chubu Electric Power, to explore joint business opportunities in LNG.

Dubai and the UAE as a whole have been net importers of gas for nearly a decade because of surging domestic, commercial and industrial demand, a trend that is set to continue.

The UAE is also eyeing more LNG supplies from the US shale gas boom, following a visit by the secretary of energy Rick Perry in December. Deliveries from Houston-based LNG supplier Cheniere Energy began arriving in UAE ports last year.

Dusup, which operates a floating storage and regasification unit (FRSU) at Dubai’s Jebel Ali port, in 2016 upgraded its LNG capability with a new, larger FRSU chartered from Excelerate Energy, based in Woodlands, Texas. Excelerate also chartered to Abu Dhabi its first FSRU, which is based at the refinery town of Ruwais in the Western Region.