Abu Dhabi National Oil Co. (Adnoc) is advancing plans to launch an initial public offering (IPO) that would combine the United Arab Emirates’ (UAE) largest natural gas companies as part of a broader plan aimed at attracting more foreign investors and funding for long-term projects. 

“Natural gas will be a critical fuel in the energy transition and ADNOC Gas…will be well-positioned to meet both local and international gas demand… and play a critical role in delivering Adnoc’s broader LNG expansion plans, including in international markets,” said Adnoc Managing Director Sultan Ahmed Al Jaber.

The new company would bring Adnoc’s liquefied natural gas and gas processing units together to form Adnoc Gas. Unveiled late last year, Adnoc intends to move ahead with an IPO of a minority stake in Adnoc Gas on the Abu Dhabi Securities Exchange this year. Reportedly valued at up to $50 billion, the IPO could come as early as this month. 

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“An IPO for Adnoc’s gas unit is highly feasible on the back of recent successful oil and non-oil IPO launches in Saudi Arabia and the UAE,” said Li-Chen Sim, a non-resident scholar at the United States Middle East Energy Institute.

The UAE plans to spend $150 billion through 2027 to boost oil and gas production capacity.  

“Adnoc will continue to leverage this IPO boom for its gas listing, but it is important to bear in mind that this is part of a larger and ongoing strategy of unlocking cash from its assets through IPOs or minority stake sales – in drilling, distribution, petrochemicals, fertilizers, pipelines – to fund long-term and costly projects for continued growth,” Sim told NGI.

These projects, Sim added, include increasing oil output capacity by one million b/d developing offshore sour gas fields, along with decarbonization and electrification of operations in line with Adnoc’s goal of reaching net-zero emissions by 2050 goal.

Existing joint venture partners under Adnoc’s two merged companies, including  Mitsui & Co., BP plc, TotalEnergies SE, Shell plc and Thailand’s PTTEP would continue in their respective partnerships under Adnoc Gas.  

The newly formed company would have a production capacity of 10 Bcf/d across eight onshore and offshore sites and a pipeline network of more than 2,020 miles, making it one of the largest gas processing and marketing companies in the Middle East. 

Sim said the UAE’s objective in developing its gas resources is “first and foremost self-sufficiency in gas for power and feedstock for its high-value petrochemicals industry since it currently imports significant quantities from Qatar.  Any surplus can then be exported as LNG or ammonia/methanol as hydrogen carriers.”

The Middle East is expected to become the world’s second largest natural gas producer by 2050, according to a report released last month by the Gas Exporting Countries Forum (GECF). In its seventh annual global gas outlook, GECF said it expects the region to supply 22% of all the world’s gas by then, compared to current levels of 17%.

Ultimately, natural gas output in the Middle East is expected to jump by 520 billion cubic meters (18.3 Tcf) to 1.2 trillion cubic meters (42.4 Tcf) by 2050.

GECF expects the global LNG trade to more than double by 2050 to reach 850 million tons (Mt). More than 130 Mt of annual liquefaction capacity is planned for the Middle East by 2050.

Growth Plans

Although Qatar is the top Middle East LNG producer, “Adnoc’s liquefaction project planned for Fujairah and several Eastern Mediterranean pipeline plans are intended to increase flows both within the region and to export markets,” according to GECF.

Adnoc currently has up to 6 million metric tons/year (mmty) of LNG export capacity at its facility on Das Island, nearly 100 miles off the coast of Abu Dhabi. The UAE exported 5.44 Mt of LNG in 2022, compared to 6.27 mt in 2021. 

Adnoc once exported most of its LNG to Japan under long-term contracts. But since 2019, India has been the top buyer. The country imported 2.70 mt from Adnoc last year, followed by Japan at 1.20 Mt and South Korea at 0.46 Mt, according to Kpler data. 

The Fujairah LNG facility on the Gulf of Oman is a 9.5 mmty low-carbon project and could increase the UAE’s LNG capacity to nearly 15.5 mmty, which would make it the second largest Middle East LNG producer. Sim said the Fujairah plant is not expected to come online until 2027.

“Nevertheless competition to secure offtake agreements with various parties is expected to be fierce” She added. “At the same time, India has also begun negotiations with Qatar to renew its LNG supply agreement until 2028.” 

Late last year, German utility RWE AG inked a multi-year LNG supply contract with Adnoc to begin delivering cargoes to Germany this year. The UAE is promoting a clean energy strategy with plans to allocate $15 billion for low-carbon projects to carbon capture and storage, hydrogen and renewables through to 2030.

“In particular, gas supplied by the UAE is likely to be more aligned with climate goals than many other alternative gas suppliers thanks to projects that are accompanied by carbon capture and reductions in methane emissions,” Sim said.