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Gas tops Saudi Aramco ambitions: Deal with Adnoc signed

The Abu Dhabi National Oil Company (ADNOC) signed today a framework agreement with Saudi Aramco (Aramco) to explore potential opportunities for collaboration in the natural gas and Liquefied Natural Gas (LNG) sectors.

The agreement was signed by His Excellency Dr. Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, and Amin Nasser, Saudi Aramco President, and CEO.

Under the terms of the agreement, ADNOC and Aramco will jointly assess investment opportunities across the LNG value chain that could unlock value and drive revenue growth for both companies. They will partner on techno-economic feasibility studies and exchange knowledge and experience in LNG growth markets.

H.E. Dr. Al Jaber said: “This agreement reinforces our strategy to undertake partnerships with forward-thinking partners who can help accelerate access to new growth centers of global demand. It will ensure that we are well-positioned to secure greater returns from global LNG demand growth by combining the technological and operational expertise of two of the world’s leading National Oil Companies.”

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The premise 

The framework agreement follows the announcement that Abu Dhabi’s Supreme Petroleum Council (SPC) has approved 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. And it will enable the company to explore LNG investment opportunities, as well as create additional value from international LNG trading expansion, in response to the dominant role Asian markets will play in driving demand for liquefied natural gas.

Nasser said: “Our cooperation further supports the corporate transformation strategy of both ADNOC and Saudi Aramco to pursue opportunities that help unlock greater value for both companies and meet the growing needs of stakeholders around the world that depend on our energy to develop and grow their economies.”

LNG growth

LNG is the fastest-growing hydrocarbon with a growth rate of 4% per year, twice that of natural gas. Global LNG demand is expected to exceed 500 million tons per year by 2035, up from nearly 300 million tons per year in 2017.

ADNOC LNG, a subsidiary of ADNOC, is a reliable LNG supplier with a proven track record of over 40 years and 2% of the global share of the LNG market.

ADNOC is a major diversified group of energy and petrochemical companies, that produces about 3 million barrels of oil and 10.5 billion cubic feet of raw gas a day.

Aramco is a world leader in integrated energy and chemicals producing approximately one in every eight barrels of the world’s crude oil supply to developing new energy technologies.

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Gas ambitions

According to Arab News, Aramco plans to massively ramp up its multibillion-dollar natural gas business, both in the Kingdom and overseas, as gas gradually replaces coal and oil in global power generation.
“Gas is already a large global business and is expected to be among the fastest-growing fuels (60 percent growth) over the next quarter-century. And LNG (liquefied natural gas) is expected to make up almost half of global gas trade over the same period,” Aramco said in a statement.

“We already produce about 14 billion standard cubic feet (bscfd) of gas, which is on the road to being expanded to 23 bscfd, which will increase our share of cleaner gas in domestic utilities from the current 55% to 75%, the highest in G-20.
“When combined with our move toward international gas business, Saudi Aramco is on the way to becoming a gas powerhouse in addition to its huge strength in oil.”

Aramco this year signed a memorandum of understanding with Royal Dutch Shell to jointly pursue global gas business opportunities, including upstream development, liquefaction projects and other aspects of the gas value chain, according to Arab News.

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According to classification society DNV GL’s latest Energy Transition Outlook, by 2025 expenditure on upstream gas will grow to $1.13 trillion.

Aramco’s gas exploration efforts have resulted in finding big volumes of shale gas in the Jafurah Basin in southeastern Saudi Arabia. “They are highly promising quantities and economically feasible as they contain a high rate of liquids; activities to evaluate the reserves are ongoing,” said Aramco.
“Unconventional gas contribution will reach to 15% of the total gas production of 23 billion bscfd per day in the gas program over the next 10 years.”

Energy Minister Khalid Al-Falih said the Kingdom aimed to acquire 30% of Russian gas producer Novatek’s $21 billion liquefied natural gas project in the Arctic.

Saudi gas has been increasingly used in the power sector, from 46% of power generation in 2000 to 59% in 2017) and total gas consumption has been rising by around 6% per year since 2000,” Arab News published.