Shell in for 10% on ADNOC's Ruwais LNG project

Shell has inked a deal with Abu Dhabi National Oil Co (ADNOC) that will see the British-based oil and gas major take a 10% stake in ADNOC’s Ruwais LNG project, which is expected to more than double ADNOC’s LNG production capacity, from 6 mta to around 15 mta.

Shell, through its Shell International Trading Middle East subsidiary, has also signed an offtake agreement for 1 mta of the LNG from the project, totalling around a 10th of the project’s expected output. 

According to Shell, the Ruwais LNG facility is set to have an electric-powered liquefaction system and will utilise access to a renewable power supply to lower operational emissions compared with gas-powered LNG facilities.

“This investment decision builds on our long-standing partnership with ADNOC," said Shell chief executive Wael Sawan. "We are investing in additional LNG capacity and further growing our world-leading LNG portfolio."

Shell’s LNG Outlook 2024 report posited that China’s switch from coal to gas for industry and growing economies in south Asia and southeast Asia will drive LNG demand growth to 2040 and beyond.

Shell has reached record profits in recent years and reported US$28Bn in annual profits in 2023, a result that was down some 30% from its all-time record-setting profits in 2022, as Europe struggled to control a surge in gas prices that resulted from Russia’s war in Ukraine and the Western sanctions that followed.

Shell saw a new chief executive take charge of the company in January 2023 who has promised to shift the company’s strategic focus to high-margin, oil and natural gas production projects.

Shell has recently cut staff and spending, including in the company’s renewables and low-carbon solutions-related divisions.

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ADNOC will hold a majority 60% share in the project and serve as the lead developer and operator of the facility, while Shell, BP, Mitsui and TotalEnergies will each hold 10%.

ADNOC has previously awarded an engineering, procurement and construction contract to a Technip-led joint venture and has said it will soon start construction on the project in Al Ruwais Industrial City, Abu Dhabi.

Ruwais LNG deliveries are expected to begin in 2028.

The site, located in Abu Dhabi’s Al Dhafrah region, will serve as an operations hub for ADNOC and its companies. The 9.6-mta Al Ruwais plant is part of ADNOC’s LNG growth project, as it intends to more than double its LNG production capacity to meet increased global demand for natural gas. The plant, which is designed with electric-powered processing facilities, will run on renewable and nuclear grid power with the intent of reducing carbon intensity. 

The Emirate of Fujairah was mooted as a potential location, but ADNOC settled on Ruwais, saying the selected location offers “significant synergies and existing infrastructure that will be leveraged to deliver project efficiencies,” unlocking additional value for ADNOC, its partners and the UAE.

The state-owned firm already operates a 6-mta LNG facility on Das Island, off the coast of the capital Abu Dhabi.