ADNOC expands its presence in the international gas market by entering into a transaction in Mozambique, marking its fourth venture in this sector outside of its own country

ADNOC has acquired a 10% share in Galp’s Area 4 concession of the lucrative natural gas project in Mozambique’s Rovuma basin. This marks ADNOC’s fourth venture into the international gas sector.

ADNOC’s recent announcement of a deal closely follows the acquisition of an 11.7% share in NextDecade’s Rio Grande liquefied natural gas (LNG) export terminal in Texas, which was confirmed on Monday.

ADNOC has ambitious plans for the development of gas and LNG, which it considers to be crucial elements for its future expansion, alongside renewable energy and petrochemicals. The company intends to increase its liquefied natural gas (LNG) capacity from 6 million metric tons per annum (mtpa) to 15 mtpa.

Europe experienced a significant increase in demand for natural gas as it urgently sought to get alternative supplies to replace Russian gas following Moscow’s invasion of Ukraine last year.

Galp announced that it will receive approximately $650 million for its shares and shareholder loans, after deducting capital gain taxes, upon the completion of the acquisition, which is anticipated to occur this year. The reported lease liabilities amounted to $525 million as of the end of 2023.

Galp stated that contingent payments of $100 million and $400 million will be made upon the final investment decision of Coral North and Rovuma LNG, respectively.

According to the agreement, ADNOC will be able to obtain a portion of the LNG production from the concession. The concession will have a total capacity of around 25 million metric tons per annum, as stated in a formal announcement.

The Area 4 concession encompasses the currently functioning Coral South Floating LNG (FLNG) plant, together with the proposed Coral North FLNG development and Rovuma LNG onshore facilities. Galp has stated that both of these projects are anticipated to receive approval in 2024/2025.

The production capacity of Coral South is 3.5 million tonnes per annum (mtpa), while Coral North is anticipated to contribute an additional 3.5 mtpa. The onshore Rovuma development is projected to yield 18 million tonnes per annum (mtpa).

According to the business, the investment is in line with ADNOC’s strategy to enhance its lower-carbon LNG portfolio and cater to the increasing demand for gas, while also aiding the energy transition.

The state oil giant considers gas as an intermediary fuel towards renewable energy sources. Sultan Al Jaber, the CEO of ADNOC, chaired the COP28 climate meeting in Dubai last year, during which almost 200 nations reached a consensus to shift away from using fossil fuels.

In October, Reuters reported that ADNOC was actively seeking LNG assets in Africa and was contemplating the acquisition of Galp’s 10% share in the Rovuma basin. This information was provided by two individuals who possess knowledge of the situation.

In February, the Abu Dhabi National Oil Company (ADNOC) and the oil giant BP announced their intention to establish a collaborative enterprise in Egypt, with an initial emphasis on natural gas. ADNOC announced its intention to purchase a 30% ownership interest in the Absheron gas and condensate field located in the Caspian Sea of Azerbaijan over the previous summer.

ADNOC is now in the process of constructing a 9.6 million tonnes per annum (mtpa) liquefied natural gas (LNG) project in Ruwais, located to the west of the capital city of the United Arab Emirates, Abu Dhabi. The project is anticipated to commence its commercial operations in the year 2028.