Wednesday, 29 May, 2024 / Edition 9

Summer has officially started in the U.S.! I hope today’s newsletter finds you enjoying the new season in your part of the world.

Now, let me share a couple of noteworthy stories this week.

Shangyou Nie

Editor, Well Read

ADNOC Buys Two International LNG Projects

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Abu Dhabi National Oil Co. (ADNOC) spent billions to join two international LNG projects in one week, showcasing its financial prowess and strategic determination to grow its global gas business.

Purchase 1:

• On 20 May, ADNOC acquired an 11.7 percent interest in Phase 1 of the Rio Grande LNG project in Texas from investment group Global Infrastructure Partners (GIP).

• Payment details have not been released but are estimated to be over $1 billion. This investment marks ADNOC’s entrance into the American LNG supply market.

• Through this deal, ADNOC has the option to join trains 4 and 5 of Rio Grande LNG.

• ADNOC has also signed a 20-year gas offtake agreement for 1.9 mtpa for train 4, which is projected to take its final investment decision (FID) during the second half of 2024.

Rio Grande LNG project details:

• Rio Grande LNG is in construction, slated to come onstream in 2029.

• Phase 1 is led by LNG developer NextDecade. It includes three trains with 18 mtpa capacity and will cost $18.4 billion to build.

• The development aims to become one of the lowest CO2 emission projects. Its carbon capture program aims to sequester 5 mtpa (90 percent) of its CO2 emissions.

• GIP has “at least” 46 percent ownership in Rio Grande LNG through a $3.5 billion investment.

• Gas off-takers include: TotalEnergies, Shell, ENN, Engie, ExxonMobil, Guangdong Energy, China Gas Hongda Energy Trading, Galp, and Itochu.

Purchase 2:

• On 22 May, ADNOC announced plans to acquire a 10 percent equity stake from Galp Energia in the Area 4 concession of Mozambique for $1.2 billion.

• The project has the resource base to build 25 mtpa LNG capacity, consisting of floating and onshore projects.

Area 4 details:

• Area 4 is operated by the Mozambique Rovuma Venture (MRV), a three-way joint venture with ExxonMobil and ENI (35.7 percent each), and China’s CNPC (28.6 percent).

• MRV holds 70 percent of Area 4. Galp, state-owned ENH, and South Korea’s Kogas each hold 10 percent.

• Area 4 has been producing 3.5 mtpa as a floating LNG project operated by ENI, which is planning to double the capacity after a FID for a second floating LNG project in 2024.

• Area 4 has over 85 tcf of gas reserves in offshore Rovuma Basin, and ExxonMobil will be the technical leader for the onshore LNG project (18 mtpa), which has been slowed due to security concerns. FID is projected for the onshore project in 2025.

ADNOC’s gas expansion goals:

• ADNOC became an LNG supplier in 1977. The company now produces 6 mtpa of LNG and is building two 4.8 mtpa trains in Abu Dhabi.

• The company plans to significantly expand its global gas business and focus international growth on gas, senior leaders said during an interview.

• ADNOC announced plans to spend more than $13 billion on growth projects over the next five years, aiming to double its LNG capacity by 2028.

Why it matters:

• For LNG players in the USA, ADNOC represents another potential investor and partner.

• For gas specialists, ADNOC provides a potential employment opportunity to help them grow their global gas portfolio and trading business.

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Shell Tries to Enter Ivory Coast

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According to recent reports, Shell is in talks to acquire three deepwater blocks in Ivory Coast. IOCs have been drawn to the small West African country in recent years, similarly to the way many have been drawn to the activity in Namibia.

Catch up fast:

• In May, one representative from the Ivory Coast government said Shell expressed interest in three exploration licenses.

• A Shell spokesperson said “discussions with government are preliminary and exploratory.”

ENI led the way:

• In September 2021, ENI (operator and 90 percent equity holder) and state partner PetroCI (10 percent equity holder), made the breakthrough deepwater discovery named Baleine.

• In March, ENI announced that it had made a second major oil discovery in Ivory Coast—Murene-1—which holds up to 1.5 billion boe. The discovery has since been renamed Calao.

Production stats for Baleine:

• Baleine is estimated to contain 2.5 billion barrels of oil in place, with 3.3 trillion cubic feet of gas. Production began in August 2023—less than 24 months after ENI’s discovery.

• Total capital investment to develop Baleine will be $10 billion.

• ENI is producing around 20,000 bpd and 25 million cubic feet of gas from Baleine, aiming to reach 50,000 bpd and 70 mscfd by end of 2024 and 150,000 bpd and 200 mscfd by 2026.

• ENI claims that Baleine will be the first “net zero” scope 1 and scope 2 emissions development in Africa.

Other Ivory Coast projects:

• In addition to ENI, a number of IOCs are working in Ivory Coast, notably TotalEnergies, Tullow, and Canadian Natural Resources.

• American independent Murphy Oil entered Ivory Coast in January, signing five new blocks just west of Baleine.

• In February, Africa-focused Vaalco Energy entered Ivory Coast when it acquired Swedish company Svenska for $67 million and became a partner with CNR and PetroCI on the producing Baobab field.

What to watch:

• As the IOCs partially pivot back from investing in renewables to oil exploration, expect fierce competition for prime acreage.

• Will large US independents try to venture into frontier exploration again, like Murphy is doing? Or will they continue to focus their investment on American shale?

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