Adnoc Gas awards $5bn in contracts for Rich Gas Development project
Abu Dhabi's Adnoc Gas has awarded contracts worth $5 billion for a key project that is part of its major operational expansion and self-sufficiency strategy.
The final investment decision is the first of three phases for the Rich Gas Development project, which is expected to boost the company's Ebitda by 40 per cent through 2029, Adnoc Gas said in a statement on Tuesday.
Ebitda – or earnings before interest, taxes, depreciation and amortisation – is a key metric used by companies to measure core profitability.
The contracts are part of what Adnoc Gas, a unit of state-owned energy major Abu Dhabi National Oil Company, said is its biggest ever capital investment. They involve boosting key processing units to increase efficiency across its four gas facilities in Asab, Buhasa, onshore Habshan and Das Island, the company said.
The engineering, procurement and construction management contracts were awarded in three tranches: Scotland-based professional services firm Wood secured $2.8 billion for Habshan, while a consortia of London-based Petrofac and Dubai's Kent received $1.2 billion and $1.1 billion for Das Island, and Asab and Buhasa, respectively.
Adnoc Gas first hinted in November that it would make the investment decision for the Rich Gas Development project in 2025. A decision for another major project, the Bab Gas Cap development, is expected in 2026.
The Rich Gas Development project will help develop new gas reservoirs, which in turn, would increase liquid gas exports, support the UAE's gas self-sufficiency agenda and provide feedstock to the country's growing petrochemical industry, the company said.
The first phase of the project will focus on optimising and removing bottlenecks in existing Adnoc Gas assets while unlocking new and valuable gas streams, in addition to future-proofing its business.
The company plans to decide on the next two phases of the project at Habshan and Ruwais to 'enable the delivery of greater production capacity to meet growing market demands', but did not give a timeline.
The investment in the Rich Gas Development project marks a 'significant milestone' for the company, Fatema Al Nuaimi, chief executive of Adnoc Gas, said in the statement.
'This strategic investment is expected to deliver significant new value for our shareholders and enable continued sustainable growth for the company, our employees and the UAE,' she added.
Adnoc Gas, which has access to 95 per cent of the UAE's natural gas reserves, is looking to boost exports of products such as liquefied natural gas, liquefied petroleum gas and naphtha.
Its customers in the Emirates include utilities and industrial companies, which are supplied commercial quantities through an extensive network of pipelines.
Adnoc Gas, alongside other Adnoc units, has been boosting investments to expand its geographical and operational reach.
In May, the company reported a 7 per cent year-on-year increase in net income to $1.27 billion, driven by strong domestic demand for gas and continued economic growth in the UAE, the Arab world's second-largest economy.
Adnoc Gas is also eligible for potential inclusion in the Morgan Stanley Capital International and Financial Times Stock Exchange emerging market indexes as early as June and September respectively, it said.
Adnoc sold part of its stake in the subsidiary to institutional investors as it looks to improve liquidity and raise capital. The recently completed offering of 3.1 billion shares in Adnoc Gas increased the free float by 4 per cent to 9 per cent.
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