Adnoc to invest Dh400bn as it eyes downstream expansion

Capex approved by the UAE's Supreme Council of Energy with domestic sour gas development also in the mix

Sheikh Mansour bin Zayed Al Nahyan, UAE Deputy Prime Minister and Minister of Presidential Affairs (L), Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces (3rd L) and Sheikh Hazza bin Zayed Al Nahyan, Vice Chairman of the Abu Dhabi Executive Council (4th L), visit the Panorama Digital Command Centre, after attending a Supreme Petroleum Council meeting, at the Adnoc) headquarters. Seen with Dr Sultan Ahmed Al Jaber, UAE Minister of State, Chairman of Masdar and CEO of ADNOC Group (2nd L) and Dr Ahmed Mubarak Al Mazrouei, Secretary General of the Abu Dhabi Executive Council (back R). ( Mohamed Al Hammadi / Crown Prince Court - Abu Dhabi ) ---

The state-owned operator Abu Dhabi National Oil Company (Adnoc) will allocate Dh400 billion in investments that will see the addition of international downstream projects and advance exploration for unconventional gas resources, according to its statement to the state news agency Wam.

The oil company’s capital expenditure programme was approved by the Supreme Council of Energy (SPC), which oversees the UAE’s energy strategy and programmes.

“We convened the SPC today and approved Adnoc’s expanded growth strategy supported by a capex program of over Dh400b,” Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, who also heads up the SPC, tweeted late on Monday.

“Adnoc will expand its portfolio through strategic international downstream investments and develop Abu Dhabi’s unconventional gas resources,” he added.

Abu Dhabi’s pursuance of international downstream projects mirror recent attempts by Arabian Gulf-based oil companies such as Kuwait Petroleum Corporation, which has invested in Vietnam’s 200,000 barrel per day (bpd) Nghi Son refinery as well as the upcoming 230,000 bpd Duqm Refinery in Oman.

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The green light to pursue gas projects will see the realisation of projects such as the offshore Hail and Ghasha field developments - one of the largest in Adnoc’s portfolio - with an estimated production of 1 billion cubic feet per day (cf/d) of sour gas.

Also likely to see acceleration is the $10bn onshore Bab gas project, exited by the Anglo-Dutch oil major Shell last year, which contains sulphur-heavy sour gas. Shell had initially planned to develop sulphur-recovery systems able to process around a billion cf/d of sour gas.

Adnoc’s capex outlay comes as part of an ongoing strategy to pursue an expanded partnership approach towards investments across its portfolio, that was announced in July.

The Abu Dhabi company recently announced plans to list one of its subsidiaries - Adnoc Distribution - on the Abu Dhabi Securities Exchange and has plans to set up an oil trading unit and float other entities under its umbrella.

It has also increased foreign stakes across its concessions. In February, China National Petroleum Corporation (CNPC) took an 8 per cent stake in Adnoc Onshore, formerly known as Adco, while China Energy took a 4 per cent stake in the Adnoc subsidiary that operates onshore concessions in the emirate.

Chinese interests combined account for the largest foreign holdings in the concession, which also includes France’s Total, BP, Inpex and South Korea’s GS Energy with Adnoc the major shareholder.

The oil major had been holding discussions with Japanese and Chinese companies to renew existing concession agreements and form new partnerships.

Last month, Adnoc signed an agreement with Japan’s Inpex and ExxonMobil to increase production from its offshore Upper Zakum oilfield to 1 million bpd by 2024 and 450,000 bpd for the onshore Bab field. It also concurrently awarded the expansion of facilities to produce crude from Bab to a CNPC subsidiary.

Across its downstream value chain, Adnoc announced plans in July to build a new petrochemicals facility as part of its Borouge joint venture with Austrian firm Borealis. The new facility will have a total capacity of 6 million tonnes a year and will produce polyolefins and non-polyolefin products.