Abu Dhabi National Oil Company (ADNOC) has agreed, in principle, to extend to 2040 its gas supply agreement with ADNOC LNG, and LNG joint venture partners, Mitsui, BP and Total.
The new gas supply agreement is scheduled to take effect from April 1, 2019, replacing an existing agreement, due to expire on March 31, 2019.
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 where they arise from the UAE’s dynamic demand/supply position and evolving energy mix.
Abdulaziz Alhajri, Director of ADNOC’s Downstream Directorate, said: “The LNG market is projected to grow at a robust pace, fueled 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 leverage this opportunity and is now modernizing 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.”
As it moves to diversify its customer portfolio, ADNOC LNG has signed seven term contracts for the supply of more than 4.2 million tons per annum (mmtpa) of liquefied natural gas (LNG).
The contracts, which cover the supply of LNG on a mid-term basis starting April 2019, have been signed with various international well-established LNG buyers, including Japan’s JERA Co., which announced, in August, it plans to purchase up to 8 cargoes per annum of LNG from ADNOC LNG, for a period of three years, starting in April 2019.
Meanwhile, discussions continue with other potential customers as ADNOC seeks to capitalize on the forecasted mid- to long-term demand for energy, particularly in the growth markets of Asia.
ADNOC was the first LNG exporter in the Middle East and has been a reliable supplier of gas to global markets for over 40 years. Abu Dhabi’s strategic geographical location gives ADNOC advantaged access to growth markets in the Middle East and Asia, which are expected to drive significant gas demand in the near- and long-term future. Historically, ADNOC has sold the majority of its LNG to Japanese customers, through ADNOC LNG.
LNG is the fastest-growing hydrocarbon with a growth rate of 4 percent per annum, twice that of natural gas. Global LNG demand is expected to exceed 500 million tons per annum by 2035, up from nearly 300 million tons per annum in 2017.