Shell takes 10% stake in ADNOC’s Ruwais LNG project in Abu Dhabi

Shell Overseas Holdings Limited, a subsidiary of Shell plc, is set to enhance its position in the global liquefied natural gas (LNG) market by acquiring a 10% participating interest in the Abu Dhabi National Oil Company’s (ADNOC) Ruwais LNG project. This strategic move, announced at a recent industry gathering, underscores Shell’s commitment to sustainable energy practices and its long-term partnership with ADNOC.

Wael Sawan, CEO of Shell, emphasized that this investment aligns with Shell’s goal to “create more value with less emissions.” By expanding into additional LNG capacity through energy-efficient projects, Shell aims to strengthen its leading position in the LNG sector, particularly with carbon-competitive ventures.

The Ruwais LNG project, situated about 240 kilometers west of Abu Dhabi in Al Ruwais Industrial City, is set to feature two state-of-the-art LNG liquefaction trains, each with a capacity of 4.8 million metric tonnes per annum, culminating in a total capacity of 9.6 mmtpa. Notably, Shell International Trading Middle East Limited FZE will also offtake 1 mmtpa of LNG produced by the facility. The project is distinctive for its electric-powered liquefaction system that integrates renewable power, aiming to achieve lower operational emissions than conventional gas-powered LNG facilities.

Shell Overseas Holdings Limited joins ADNOC’s Ruwais LNG project with a 10% interest, bolstering its commitment to eco-friendly and efficient energy solutions.

ADNOC retains a majority 60% share and will lead the development and operation of the project. Other industry giants like BP, Mitsui, and TotalEnergies each hold a 10% stake. The engineering, procurement, and construction (EPC) phase is spearheaded by a Technip-led joint venture, with construction expected to commence shortly.

The project’s impact extends beyond the immediate region. With global LNG demand projected to rise by over 50% by 2040, primarily due to coal-to-gas switching in Asian markets, Shell’s investment in the Ruwais project positions it as a pivotal player in supporting the global energy transition. LNG from this project will contribute to displacing coal in heavy industries and power generation, thereby aiding in the reduction of local air pollution and carbon emissions.

This strategic investment not only promises significant returns, adhering to Shell’s internal rate of return expectations for its Integrated Gas business, but also solidifies its growth ambitions, aiming for a 25-30% increase in liquefaction volumes by 2030. The financing for this investment will be accommodated within Shell’s existing cash capital expenditure framework, ensuring financial prudence while pursuing expansion.

Shell’s investment in ADNOC’s Ruwais LNG project is a testament to the evolving dynamics of the global energy market, where sustainability and efficiency are paramount. This move is strategically significant, not just for Shell but for the broader energy landscape, setting a precedent for future eco-conscious energy projects.”

In conclusion, Shell’s participation in the Ruwais LNG project is a critical step forward in its sustainability journey, providing a robust framework for the future of energy production and consumption, with a clear focus on reducing environmental impact and enhancing global energy security.