Latest news with #Adnoc
The Star
13 hours ago
- Business
- The Star
Even Big Oil thinks Big Oil is getting too risky these days
What's an oil producer to do when it sees its core product under threat from declining demand and a war-torn neighbourhood? Just ask Abu Dhabi National Oil Co. The US$19bil all-cash bid for Australian gas producer Santos Ltd on Monday, from a consortium led by the state-owned United Arab Emirates (UAE) business also known as Adnoc, is one answer to the question. Adnoc has been on a shopping spree for gas assets in recent years. In common with its far larger peer Saudi Arabian Oil Co, which is currently spending more money developing new gas fields than crude reserves, it's been gradually transforming itself from a business that lives and dies on black gold, to one that cares as much about liquefied natural gas (LNG) ships as oil tankers. Just look at the list of deals made and mooted lately. Last May, it bought a stake in NextDecade Corp's liquefied natural gas export project in Texas. In April, people familiar with the matter told Bloomberg News it was considering a US$9bil bid for Aethon Energy Management's gas assets in Texas and Louisiana. It's also interested in buying BP Plc's gas assets in a potential breakup, Bloomberg News reported last week. In 2023, Adnoc spun off its own gas business and floated it on the Abu Dhabi stock exchange, where it makes up about one-seventh of the market. Last year, it started building an export terminal at Ruwais in the west of the country, a huge complex sufficient to meet all of Turkey's needs for imported LNG. In an environment where Israel's attack on Iran is ratcheting up the risk of all-out war in the region, there are several advantages to this strategy. For one thing, there's the perennial fear that Tehran, if pushed to the brink, may start creating problems in the Strait of Hormuz. The narrow stretch of water is guarded by Iran, Oman, and the UAE. Sustained attacks on shipping haven't happened since the 1980s Iran-Iraq war, not least because Iran's export revenues would suffer quite as much as its enemies'. It's still prudent to minimise the risk from such a weak point, though, in case a cornered Iranian government reaches for desperate measures. We're facing a world where oil demand is looking distinctly shaky, with crude production still sitting below the peak it hit back in 2018. Gas isn't doing that much better, with growth slowing well below historic rates thanks to the collapse in Russian pipeline exports since the 2022 invasion of Ukraine and a rising price that's deterring potential buyers in developing Asia and Africa. The segment of gas that's traded as LNG, however, has been a winner, with the capacity of liquefaction plants set to increase by about 40% between now and 2030. Maritime straits, like gas pipelines, are highly vulnerable to geopolitical meddling. If you can buy LNG assets that aren't exposed to Middle Eastern wars, however, you can avoid both the chronic decline in conventional petroleum demand, and the acute risks of conflict-driven supply shocks. These days, such assets aren't as abundant as a cash-rich national oil company might hope. Santos shares closed at a roughly 13% discount to Adnoc's cash offer on Monday, which has already been recommended by the target's board. Given the open-and-shut nature of the proposal, that's likely to reflect worries that Australia's Foreign Investment Review Board won't like the idea of a state-owned company that doesn't even publish financial statements buying the country's second-biggest petroleum business. It's still more likely to get over the line than other options out there. President Donald Trump was happy to boast about the deals struck with UAE businesses during his trip to the Middle East last month – but if you want an outright takeover, the United States in its current nativist mood probably isn't the best place to be looking. The final agreement over the sale of United States Steel Corp to Nippon Steel Corp, giving the US government a golden share that would allow it to dictate corporate policies, is an indicator of where things are headed. Other prospective regions such as South America, Central Asia and sub-Saharan Africa are already largely locked up by state-owned and independent oil companies. Europe's North Sea is in inexorable decline. Pickings are looking slim. The UAE is better placed than many to ride out the transition away from fossil fuels. Its vibrant non-oil economy means it can balance its budget and current account at the lowest crude prices in the Gulf. Only Qatar and Turkmenistan, among major petroleum exporters, do better – and each is essentially a gas producer, not an oil state. Eking out future revenues as the world's hunger for oil and gas declines is going to require emulating them, rather than the UAE's more oil-rich neighbours. — Bloomberg David Fickling is a Bloomberg Opinion columnist. The views expressed here are the writer's own.
Bloomberg
16 hours ago
- Business
- Bloomberg
Adnoc's Santos Takeover Bid a Regulatory Test
Good morning, it's Paul-Alain Hunt in the Melbourne bureau with the headlines to start your Friday. The ASX is set to open in the red, but first... Today's must-reads: • Adnoc, Santos and regulatory risk • Australian funds cut US Treasuries holdings • What happens if Aukus falls apart? Abu Dhabi National Oil Co.'s bullish US$18.7 billion takeover bid for Santos will weigh who controls critical energy infrastructure against the need to address a looming domestic gas shortfall. Australia's world-first social media ban for under-16s moved closer to implementation after a key trial found that checking a user's age is technologically possible and can be integrated into existing services.
The National
2 days ago
- Business
- The National
Rising Middle East tension a reminder that energy is a 'cornerstone of peace', Dr Al Jaber says
Rising tension in the Middle East is a reminder that energy is a 'cornerstone of peace, stability and ensuring prosperity', Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and Adnoc's managing director and group chief executive, said on Tuesday. The war between Israel and Iran has sparked fears of a potential supply crisis in energy markets, with Brent oil prices rising above $75 a barrel on Tuesday. 'The UAE stands for dialogue, de-escalation and diplomacy,' Dr Al Jaber said during a keynote address at the Atlantic Council Global Energy Forum in Washington. Dr Al Jaber said countries must also remain focused on opportunities – chiefly the burgeoning artificial intelligence sector – as partners remain committed to dialogue and diplomacy. US Energy Secretary Chris Wright, who was scheduled to speak at Tuesday's forum, cancelled his appearance to assist President Donald Trump as the crisis worsens, the Atlantic Council's president said before Dr Al Jaber spoke. 'Once-in-a-generation' investment opportunity AI is "driving the next stage of evolution" and the advanced technology is driven by energy, he said. AI requires significant energy to be powered through data centres. The US will require between 50 and 150 gigawatts of new installed capacity and this demand brings a 'once-in-a-generation investment opportunity', Dr Al Jaber added. He said the UAE is 'wasting no time in taking our powerhouse energy partnership with the US to the next level'. 'The United States is not just a priority. It is more of an investment imperative. This is not just capital, it's conviction and a shared future, partners, colleagues and friends." Mariam Almheiri, head of the International Affairs Office at the Presidential Court, said the UAE was "extremely excited" about its partnership with the US, as the Emirates continues to build its AI infrastructure. "We have built the bridges, built the right ingredients to help with this transformation," she said during a panel discussion. The UAE has announced a number of planned investments in the US since Mr Trump began his second term in January. Chief among those was a $1.4 trillion investment framework announced by the White House in March. During another panel on Wednesday, Emirates Nuclear Energy Company chief executive Mohamed Al Hammadi said he was "very bullish on the US market" because of the demand for electricity. Calling the US the "top innovator in the world", Mr Al Hammadi also noted the US's role as a leader in AI. During Mr Trump's visit to the UAE in May, Dr Al Jaber announced the UAE intends to boost its investment in the US energy sector to $440 billion by 2035 as part of that framework. The UAE will increase its US energy investments sixfold over the next decade through XRG, he said. XRG, Adnoc's global energy investment arm, signed an agreement with Occidental and subsidiary 1PointFive last month on a potential investment for a direct air capture project in Texas. XRG could invest up to $500 million in the project. US companies are also expected to invest up to $60 billion in UAE energy projects, including a field development plan with ExxonMobil and Japanese companies Inpex and Japan Oil Development Company to expand the capacity of Abu Dhabi's Upper Zakum offshore field. Adnoc and Occidental also agreed on a collaboration to potentially increase Shah Gas's production capacity from 1.45 billion to 1.85 billion standard cubic feet per day. Also in March, Abu Dhabi's sovereign wealth fund ADQ announced plans to invest more than $25 billion in mostly US-based energy projects to power data centres with US private equity firm Energy Capital Partners.
Gulf Insider
2 days ago
- Business
- Gulf Insider
Abu Dhabi Makes Major Push Into LNG With $19 Billion Santos Takeover
Abu Dhabi is making its biggest energy play yet, as it seeks to become a major global force in liquefied natural gas (LNG). Its state oil company, ADNOC, through its investment arm XRG PJSC, has led a $19 billion takeover offer for Australia's Santos Ltd., a move that would give it direct access to LNG production and exports into booming Asian markets, according to Bloomberg. 'Abu Dhabi is long oil, but is seeking to be a more material player in LNG markets,' said Bernstein analysts led by Neil Beveridge. 'The acquisition of Santos would help enable Adnoc to become a bigger LNG player in key growth markets in Asia.' Santos' LNG capacity is expected to hit 7.5 million tons annually once Australia's Barossa project begins later this year. Combined with ADNOC's existing 6 million tons of domestic LNG capacity and a planned 9.6 million-ton terminal, the deal would position Abu Dhabi as a competitive mid-tier global LNG supplier. 'If completed, the deal could push Adnoc into the ranks of majors like Shell and ExxonMobil,' Bernstein analysts noted. Bloomberg Intelligence adds that it could give Adnoc a 15–20 million ton per year (MTPA) portfolio, depending on how it scales operations. 'It would still be a big leap from where they are now, which is mostly domestic-focused,' said BI analyst Salih Yilmaz. Bloomberg writes that the acquisition also advances Abu Dhabi's broader strategy: convert oil wealth into sustainable economic growth. Beyond LNG, the UAE is investing in tech, tourism, and manufacturing while aiming for gas self-sufficiency this decade. XRG PJSC, ADNOC's $80 billion investment arm launched in late 2023, is leading the charge. It aims to double its value within 10 years and become one of the top five integrated global gas and LNG businesses. XRG already has LNG deals in place, including a 20-year supply contract for 1.9 million tons per year from NextDecade's Rio Grande LNG in the U.S. With Santos' addition, XRG's portfolio would swell to about 14 million tons per year in projects, stakes, and supply contracts — expanding its reach into high-demand Asian markets and reducing reliance on U.S. deals.
Straits Times
2 days ago
- Business
- Straits Times
Middle East oil giants bring their billions in search of LNG riches
While still overshadowed by oil in terms of its importance in the global energy system, LNG is seeing faster growth and more sustained demand. PHOTO: REUTERS A new breed of investors is expanding into liquefied natural gas, one of the world's hottest commodities, offering billions of dollars for new projects and squeezing out established players. With billions of dollars at their disposal and strong government backing, national oil companies – primarily from the Middle East – have been splurging on global LNG production, with capacity set to nearly double in the next ten years. Lured by the ballooning profits of current industry leaders such as Shell Plc, they're making bold moves, as Abu Dhabi's US$19 billion (S$24 billion) offer for Australian LNG producer Santos Ltd. this week indicated. Saudi Aramco has just positioned itself among the world's biggest LNG players to supply energy-hungry Egypt, and QatarEnergy, a major supplier for years, is proceeding with developing its export project in Texas. While still overshadowed by oil in terms of its importance in the global energy system, LNG is seeing faster growth and more sustained demand thanks to its role as a transition fuel backing up renewables. But many projects have been held back by delays and cost overruns, and are in need of cash to make it across the finish line. For Gulf countries, it offers a chance to pursue more international heft in energy, finance and geopolitics, as well as diversify their oil-focused economies. 'LNG seems to be still the best bet across all different hydrocarbon commodities,' said Ogan Kose, a managing director at Accenture. Margins from investing in and trading LNG are 'almost unheard of in any other hydrocarbon commodity.' The investment push by Abu Dhabi National Oil Co., Aramco, and QatarEnergy is joined by Bahrain, Kuwait and Oman looking to expand in LNG trading, which has been a successful venture for involved companies in recent years. Some of those countries also currently depend on fuel imports and are therefore looking to expand production for domestic use. The trend is not limited to the Middle East, though it's where most recent activity has come from. Petroliam Nasional Bhd., Malaysia's state-owned oil and gas company, and other southeast Asian companies are looking beyond their borders as domestic LNG production is declining. Adnoc, Aramco, QatarEnergy and Petronas didn't immediately respond to requests for comment. For the US LNG developers and oil majors that have so far dominated the space, it's become more challenging to get multibillion-dollar projects across the finish line as climate goals restrict some buyers' ability to sign decades-long supply deals. Many projects are suffering from time and cost overruns, and are subject to operational risks as well as volatile trading. Middle Eastern competitors have significantly more firepower, with Adnoc's international gas and chemicals investment unit XRG boasting an enterprise value of over $80 billion. 'One of the issues on the market has been the issue of finding capital,' said Massimo di Odoardo, a vice president at WoodMackenzie Ltd. in London. 'Increasingly you are seeing more private capital helping those projects to cross the line,' with part of that coming directly from national oil companies. As many of these Middle Eastern firms will also act as LNG offtakers before selling the cargoes onwards, there's less need for project developers to sign deals directly with buyers in order to reach a final investment decision. Some players, such as QatarEnergy, are already in a stronger position as they have LNG buyers lined up after nearly three decades of exporting domestic fuel, as well as access to import capacity in European terminals. 'Oil companies that have in the past produced oil at home have realized that they need to do gas internationally,' said Christopher Strong, a partner for energy transactions and projects at law firm Vinson & Elkins LLP. Still, the spending push is not without risks, primarily as buyers could become more difficult to find as countries progress toward net zero targets, even if the additional supply helps to lower prices. The International Energy Agency estimates gas demand will peak by 2030, and there's a risk that LNG supply will outstrip consumption. In addition, violence in the Middle East during the past week has highlighted the vulnerable nature of trading fuel across long distances and the gas market's exposure to sudden shifts in geopolitics. A major focus for most of the involved firms – including QatarEnergy, Aramco and Adnoc – has been on building trading desks early. Trading is a key element to support growing LNG ambitions outside their home countries, as it allows them to find the best priced markets for rising supply, Accenture's Kose said. A greater pool of suppliers should also benefit buyers of LNG, according to di Odoardo, as it will help boost competition and optionality. Fluctuating demand and persistently high prices have led some tankers to hold on to partial cargoes, posing a challenge for traditional commodity traders. A key question is how easy it will be to find these buyers once more projects come online. 'The risk is a market that has already built quite a bit of LNG and is looking to build a bit more,' di Odoardo said. 'And the question mark is how much additional demand will emerge?' BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
