ADNOC widens its global LNG arsenal by joining Eni’s Coral Sul FLNG project

The UAE’s oil and gas heavyweight, Abu Dhabi National Oil Company (ADNOC), is burning the midnight oil to enlarge its liquefied natural gas (LNG) portfolio, as illustrated by its deal with Portugal’s oil and gas company Galp, which will enable it to acquire the latter’s upstream assets in Mozambique, including a stake in Eni’s Coral Sul floating LNG (FLNG) offshore facility.

Main takeaways:

• ADNOC expands its LNG footprint with another country entry through its first investment foray in Mozambique
• UAE player gains access to potential LNG capacity of more than 25 million tonnes per annum (mtpa)
• This move enables ADNOC to continue boosting its gas resources in line with its strategy of pursuing lower-carbon LNG in support of energy transition

The agreement for the acquisition of Galp’s 10% interest in the Area 4 concession opens doors to Mozambique’s Rovuma supergiant gas basin for ADNOC, enabling the UAE energy heavyweight to take part in what is deemed to be one of the world’s largest gas discoveries in the past fifteen years. The Area 4 concession encompasses the operational Coral Sul FLNG facility, the planned Coral North FLNG development, and the Rovuma LNG onshore facilities, both expected to be sanctioned during 2024/25.

While describing this as “a major milestone” in its international growth strategy, following its entrance into the U.S. thanks to agreements for LNG offtake and an equity position in the Rio Grande LNG (RGLNG) export project located in Texas, ADNOC highlights that its first investment in Mozambique complements its efforts to expand its lower-carbon LNG portfolio to meet growing gas demand and support “a just, orderly and equitable” energy transition.

The acquisition of a stake in Area 4 will entitle ADNOC to a share of the LNG production from the concession, which has a combined production capacity exceeding 25 mtpa. Upon completion, Galp will receive around $650 million for its shares and shareholder loans, already net of capital gain taxes. As of the transaction reference date of December 31, 2023, lease liabilities were $525 million, based on the firm’s data.

However, the Portuguese player explains that additional contingent payments of $100 and $400 million will be payable with the final investment decisions (FIDs) for Coral North and Rovuma LNG, respectively. This acquisition is subject to customary third-party approvals, with completion expected during 2024.

Musabbeh Al Kaabi, ADNOC’s Executive Director for Low Carbon Solutions and International Growth, commented: “For over fifty years, ADNOC has been a reliable and responsible global provider of LNG and we are building on this role with this landmark investment in the world-class Rovuma supergiant gas basin in Mozambique as we deliver on our international growth strategy.

“Natural gas plays an important role to meet growing global demand with lower emissions compared to other fossil fuels and this acquisition supports our efforts to build an integrated global gas business to ensure we continue providing a secure, reliable and responsible supply of natural gas.”

While the Eni-operated Coral South development, currently in operation, is capable of producing up to 3.5 mtpa of LNG and is said to represent the first facility of its kind in Africa, the proposed Coral North development is expected to produce a further 3.5 mtpa of LNG through an FLNG facility to process and liquefy natural gas for export. 

On the other hand, the 18-mtpa Rovuma onshore LNG development has a modular, electric-drive design that is anticipated to dramatically reduce the carbon intensity of the LNG it will produce compared to industry benchmarks. ADNOC emphasizes that the facility’s design philosophy and emphasis on limiting carbon dioxide (CO2) emissions is aligned with the UAE firm’s ambition to achieve net zero by 2045. 

In the meantime, the company is moving forward with the Ruwais LNG project in Al Ruwais Industrial City, Abu Dhabi. To this end, ADNOC got a hold of a third long-term LNG supply agreement for the project, thanks to a deal with EnBW Energie Baden-Württemberg (EnBW) to deliver 0.6 million mtpa of LNG.