Adnoc Extends Gas Supply Deal to LNG Company

The Abu Dhabi National Oil Company (Adnoc) has agreed, in principle, to extend to 2040 its gas supply agreement with Adnoc LNG, a joint venture with Japanese Mitsui, UK major BP and French Total, it said November 14. It starts April 1 next year, the day after the present agreement expires.

The extension announcement follows the Abu Dhabi’s Supreme Petroleum Council (SPC) approval of Adnoc’s new integrated gas strategy that will sustain LNG production to 2040 and allow Adnoc to seize incremental LNG and gas-to-chemicals growth opportunities, Adnoc said.

Adnoc said that the LNG market is projected to grow at a robust pace, fuelled by demand from Asia and developing countries who want access to a clean and affordable source of energy. With over four decades of experience in the LNG market, Adnoc LNG is well-positioned to benefit from this opportunity and is now modernising its commercial approach to transition from a single-customer to a multi-customer business that includes a number of global utilities as well as portfolio players and traders.

Adnoc LNG said in its November 14 statement that it "has signed seven term contracts for the supply of more than 4.2mn metric tons/yr... on a mid-term basis starting April 2019... with various international well-established LNG buyers."

It acknowledged only one of these has been announced to date – with Japan’s Jera for about 0.5mn mt/yr for three years. The latter represents a substantial reduction in Jera's offtake from Adnoc LNG.

Adnoc said discussions continue with other potential customers as Adnoc seeks to capitalise on the mid- to long-term demand for energy, particularly in the growth markets of Asia. Historically, Adnoc has sold most of its LNG to Japan. it said.

Separately, Adnoc said Nov.14 it will invest $1.4bn to boost the crude oil production capacity of its Bu Hasa oilfield to 650,000 b/d by 2020, from 550,000 b/d now, and signed the contract for implementing this with Spanish contractor Tecnidas Reunidas; it will take 39 months to complete.