Why is Ruwais LNG an attractive position for the selected partners?

Ruwais LNG is a two-train 9.6 mmtpa project located in the industrial city of Ruwais in Abu Dhabi. Sanctioned by ADNOC last month, the project will nearly triple UAE’s existing LNG production capacity.

Fill out the form to download our full analysis of the partner selection, or read on, as we discuss how involvement in Ruwais LNG aligns with the project partners’ LNG strategies.

Why is Ruwais LNG an attractive position?

The involvement of the IOCs in Ruwais LNG is not surprising, as the project is appealing on multiple levels.

• Geographic location: Gives the project access to Asian and European markets.

• Relatively low emissions: The project will be fully electric and powered by nuclear and solar energy sources. This will reduce the project’s emissions, making exports into markets with stringent emission regulations more appealing and will help align with the IOCs’ strategies for reducing emissions.

• Reduced development risk: Ruwais LNG benefits from being post-FID, however, there could be delays in sanctioning other pre-FID projects. This suits the partners with ambitious LNG portfolio growth objectives by the end of this decade.

• Supply outside the US and Qatar: The majority of new large-scale global supply is from the US and Qatar. Ruwais offers an alternative source of supply.

How does the project align with the partners’ LNG strategies?

The involvement of each partner can be considered within their wider LNG corporate strategies.

• TotalEnergies: The project will allow integration and optimisation with its upstream assets in the UAE. This integration is a key theme across TotalEnergies’ LNG strategy and one it has used to grow its equity LNG globally. Ruwais LNG will also provide some ailment to the loss of volumes from Arctic LNG-2 and potential loss from Yamal LNG if sanctions against Russia increase.

• BP: Similar to TotalEnergies, this will allow BP (who hold a 10% interest in ADNOC Onshore) to integrate with its UAE upstream business. Interestingly, this is BP’s first entry into an equity LNG position since its 2020 policy to reduce its oil and gas production by 2030 by 40% (compared to 2019 numbers). Instead, growth has largely been driven through new third-party offtake. That said, it revised its reduction target to 25% in 2023 suggesting it would be going longer on oil & gas, a remark further supported by this pivot back to equity LNG.

• Shell: Following on from its acquisition of Pavilion’s LNG assets, this deal is another step for Shell towards its aim to grow its LNG business by 20 to 30% by 2030, compared to 2022. With this, Shell maintains its position as the number one IOC in LNG. Shell has also been vocal on the need for LNG in the energy transition – lower emission projects such as Ruwais LNG will be vital for LNG to prosper in a low-carbon world. Shell’s decision to enter the project follows decisions to exit higher emission pre-FID projects Browse and Abadi, which will help Shell retain a high-grade portfolio.

• Mitsui & Co: The company has expanded its LNG business globally. Mitsui sees gas and LNG as an integral part of the energy transition. The lower emission intensity of the project is one of the key drivers for Mitsui. Additionally, Ruwais could replace volumes that have been delayed and may not reach the market from Arctic LNG 2 and Mozambique LNG.

Ruwais LNG provides an attractive position that aligns with each partner’s LNG strategies. The project benefits from an advantageous location, has relatively low emissions and will aid the partners in hitting their LNG growth targets. As the project continues, all involved will be eager to ensure it progresses smoothly and hits its timelines.
Source: Wood Mackenzie