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Chinese enterprises and UAE natural gas cooperation usher in new opportunities
This year marks the 40th anniversary of the establishment of diplomatic relations between China and the United Arab Emirates. Not long ago, the two governments issued a joint statement emphasizing the importance of ensuring energy security and sustainability, and expressed willingness to strengthen cooperation in areas such as natural gas. The United Arab Emirates is located at the intersection of the Land Sea Silk Road and is the fifth largest source of crude oil imports for China. In the wave of global green transformation, in recent years, the United Arab Emirates has regarded natural gas as a key path to achieve carbon reduction, vigorously promoting domestic natural gas self-sufficiency and liquefied natural gas (LNG) exports, actively laying out global natural gas assets, and bringing new opportunities for Chinese enterprises to expand natural gas cooperation with the UAE.
Natural gas becomes an important transitional energy for the UAE's green transformation
The energy security and economic development of the United Arab Emirates require natural gas. In July 2023, the UAE government updated its National Energy Strategy 2050, which not only increases the goal of achieving carbon neutrality by 2050, but also explicitly sets a target of 38% natural gas in the energy consumption structure by 2050, providing fundamental guidance for the development of its natural gas industry. In the same year, the United Arab Emirates hosted the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) and, together with Saudi Arabia, issued the "Charter for Decarbonization of Oil and Gas", which aims to ensure the development space of the traditional oil and gas industry by actively accelerating decarbonization. In addition, the production of blue hydrogen from natural gas is included in the UAE's 2050 National Hydrogen Strategy, with plans to achieve an annual production capacity of 400000 tons of blue hydrogen by 2031.
The United Arab Emirates has a strong resource foundation for developing natural gas. According to the World Energy Statistical Yearbook 2024 by the UK Energy Research Institute, as of the end of 2020, the United Arab Emirates had proven natural gas reserves of 5.94 trillion cubic meters, accounting for 3.16% of the world's proven natural gas reserves and ranking eighth in the world; The natural gas reserve production ratio has reached 107 years, providing a solid resource foundation for future production increases. In recent years, the United Arab Emirates has been increasing its exploration efforts. In 2020, the United Arab Emirates discovered 80 trillion cubic feet of shallow natural gas across the Abu Dhabi and Dubai Emirate regions. In 2022, Eni announced two significant natural gas discoveries in the UAE waters where it operates, with a total geological reserve of approximately 2.5 to 3.5 trillion cubic feet. This is the first offshore natural gas discovery in the UAE, confirming the resource potential of natural gas in its waters.
The United Arab Emirates regards the development of the natural gas industry as a strategic priority. Despite abundant natural gas reserves, the United Arab Emirates is also a major consumer of natural gas, and currently its natural gas production is still unable to achieve self-sufficiency in the domestic market. According to the World Energy Statistical Yearbook 2024, the United Arab Emirates will continue to be a net importer of natural gas with a natural gas consumption of 66.888 billion cubic meters and a natural gas production of 55.561 billion cubic meters in 2023. Therefore, the UAE will vigorously develop natural gas as an important component of its future energy development strategy, aiming to achieve self-sufficiency in natural gas by 2030, and hopes to consolidate its market position as a reliable global energy supplier through the development of LNG exports. At present, the United Arab Emirates only has one LNG export project, which was put into operation in 1977 with an LNG export capacity of 6 million tons per year. Abu Dhabi National Oil Company, Mitsui, BP, and Total Energy hold 70%, 15%, 10%, and 5% equity respectively. In addition, the UAE is actively expanding its global natural gas business, laying a solid foundation for the international operation of its natural gas business.
UAE takes multiple measures to promote comprehensive development of natural gas industry
Intensify domestic natural gas development efforts. In October 2023, Abu Dhabi National Oil Company announced the final investment decision for the development of the Hail and Ghasha offshore ultra acidic natural gas projects, which are expected to achieve an annual production capacity of 10 billion cubic meters, approaching the domestic natural gas supply gap in the UAE by 2023, and taking an important step towards achieving the strategic goal of self-sufficiency in natural gas. Although the project has the characteristics of "small equity, large investment, and non operator", it still attracts active participation from foreign oil companies. In addition to Abu Dhabi National Oil Company holding 55% equity, Eni, Thai National Oil Company, Austrian energy group OMV, and Russian Lukoil hold 25%, 10%, 5%, and 5% equity, respectively.
Promote domestic liquefied natural gas exports. In 2024, the final investment decision for the Ruwais LNG project, in which Abu Dhabi National Oil Company holds a 100% stake, is completed, with plans to commence operations in 2028. The project is located in the Abu Dhabi Ruwais Industrial City and plans to construct two LNG production lines with a total LNG export capacity of 9.6 million tons per year. Once fully completed, the UAE's LNG export capacity will increase to 15.6 million tons per year, providing approximately 15 billion cubic meters per year of raw gas market space for domestic natural gas. From December 2023 to August 2024, Abu Dhabi National Oil Company signed long-term LNG supply agreements with China's New Austrian Natural Gas, Germany's SEFE company, Germany's EnBW company, and Japan's Osaka Gas company, totaling 3.4 million tons per year.
Develop a global natural gas strategic layout. Abu Dhabi National Oil Company is accelerating the pace of building a global core natural gas asset portfolio. In August 2023, the company announced the acquisition of a 30% stake in Azerbaijan's Absheron gas field, achieving a strategic layout in the Caspian Sea region; In February 2024, the company announced the establishment of an Egyptian joint venture with BP at a ratio of 49:51% to jointly explore and develop natural gas in the eastern Mediterranean of Egypt; In May 2024, the company announced the acquisition of an 11.7% stake in NextDecade's LNG Phase I project located in Rio Grande, Texas, USA, to expand its business in the Gulf of Mexico; In the same month, it announced the acquisition of 10% equity in Block 4 of the Rovuma Basin in Mozambique by Portugal's Galp Energy Company, laying out oil and gas business in the East African waters.
Chinese enterprises should seize opportunities to expand cooperation with Afghanistan's natural gas industry
Actively seize the development opportunities of the UAE's natural gas industry. The natural gas industry in the United Arab Emirates is in a period of rapid development, and Chinese companies should seize the opportunity in a timely manner to expand strategic cooperation with the UAE in the natural gas field. Closely monitor opportunities for LNG integration cooperation, while ensuring downstream market space and reasonable sales prices, leverage domestic market advantages to promote LNG trade cooperation, and seek project cooperation opportunities for natural gas exploration and development, LNG liquefaction export terminals, and downstream to drive upstream. Select partners with strong exploration capabilities and good performance, and increase exploration efforts in the UAE waters at the right time. Utilize the advantages of domestic unconventional natural gas exploration and development technology, explore the layout of unconventional natural gas cooperation in the UAE, and strive to become an operator. Strengthen cooperation in natural gas exploration and development services and engineering construction, and study the feasibility of cooperation in natural gas chemical industry, natural gas to blue hydrogen blue ammonia and other fields.
Strengthen the top-level design of cooperation with UAE natural gas. Chinese enterprises should actively participate in the energy cooperation mechanism between the Chinese and Arab governments, strengthen communication and contact with the UAE, express their willingness to cooperate through signing memorandums of cooperation and other forms, showcase their domestic natural gas exploration and development technology strength and achievements, and create a positive and friendly atmosphere for cooperation. Research and formulate an integrated development strategy plan, effectively leverage the advantages of Chinese enterprises, especially the domestic market advantages and unique technological advantages of domestic upstream, and combine with the development demands of UAE natural gas to strive for the best cooperation effect. Studying and drawing on the beneficial practices of the UAE's global natural gas strategy layout, Abu Dhabi National Oil Company will be selected as a strategic partner to seek cooperation in natural gas business layout in third countries.
Natural gas becomes an important transitional energy for the UAE's green transformation
The energy security and economic development of the United Arab Emirates require natural gas. In July 2023, the UAE government updated its National Energy Strategy 2050, which not only increases the goal of achieving carbon neutrality by 2050, but also explicitly sets a target of 38% natural gas in the energy consumption structure by 2050, providing fundamental guidance for the development of its natural gas industry. In the same year, the United Arab Emirates hosted the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) and, together with Saudi Arabia, issued the "Charter for Decarbonization of Oil and Gas", which aims to ensure the development space of the traditional oil and gas industry by actively accelerating decarbonization. In addition, the production of blue hydrogen from natural gas is included in the UAE's 2050 National Hydrogen Strategy, with plans to achieve an annual production capacity of 400000 tons of blue hydrogen by 2031.
The United Arab Emirates has a strong resource foundation for developing natural gas. According to the World Energy Statistical Yearbook 2024 by the UK Energy Research Institute, as of the end of 2020, the United Arab Emirates had proven natural gas reserves of 5.94 trillion cubic meters, accounting for 3.16% of the world's proven natural gas reserves and ranking eighth in the world; The natural gas reserve production ratio has reached 107 years, providing a solid resource foundation for future production increases. In recent years, the United Arab Emirates has been increasing its exploration efforts. In 2020, the United Arab Emirates discovered 80 trillion cubic feet of shallow natural gas across the Abu Dhabi and Dubai Emirate regions. In 2022, Eni announced two significant natural gas discoveries in the UAE waters where it operates, with a total geological reserve of approximately 2.5 to 3.5 trillion cubic feet. This is the first offshore natural gas discovery in the UAE, confirming the resource potential of natural gas in its waters.
The United Arab Emirates regards the development of the natural gas industry as a strategic priority. Despite abundant natural gas reserves, the United Arab Emirates is also a major consumer of natural gas, and currently its natural gas production is still unable to achieve self-sufficiency in the domestic market. According to the World Energy Statistical Yearbook 2024, the United Arab Emirates will continue to be a net importer of natural gas with a natural gas consumption of 66.888 billion cubic meters and a natural gas production of 55.561 billion cubic meters in 2023. Therefore, the UAE will vigorously develop natural gas as an important component of its future energy development strategy, aiming to achieve self-sufficiency in natural gas by 2030, and hopes to consolidate its market position as a reliable global energy supplier through the development of LNG exports. At present, the United Arab Emirates only has one LNG export project, which was put into operation in 1977 with an LNG export capacity of 6 million tons per year. Abu Dhabi National Oil Company, Mitsui, BP, and Total Energy hold 70%, 15%, 10%, and 5% equity respectively. In addition, the UAE is actively expanding its global natural gas business, laying a solid foundation for the international operation of its natural gas business.
UAE takes multiple measures to promote comprehensive development of natural gas industry
Intensify domestic natural gas development efforts. In October 2023, Abu Dhabi National Oil Company announced the final investment decision for the development of the Hail and Ghasha offshore ultra acidic natural gas projects, which are expected to achieve an annual production capacity of 10 billion cubic meters, approaching the domestic natural gas supply gap in the UAE by 2023, and taking an important step towards achieving the strategic goal of self-sufficiency in natural gas. Although the project has the characteristics of "small equity, large investment, and non operator", it still attracts active participation from foreign oil companies. In addition to Abu Dhabi National Oil Company holding 55% equity, Eni, Thai National Oil Company, Austrian energy group OMV, and Russian Lukoil hold 25%, 10%, 5%, and 5% equity, respectively.
Promote domestic liquefied natural gas exports. In 2024, the final investment decision for the Ruwais LNG project, in which Abu Dhabi National Oil Company holds a 100% stake, is completed, with plans to commence operations in 2028. The project is located in the Abu Dhabi Ruwais Industrial City and plans to construct two LNG production lines with a total LNG export capacity of 9.6 million tons per year. Once fully completed, the UAE's LNG export capacity will increase to 15.6 million tons per year, providing approximately 15 billion cubic meters per year of raw gas market space for domestic natural gas. From December 2023 to August 2024, Abu Dhabi National Oil Company signed long-term LNG supply agreements with China's New Austrian Natural Gas, Germany's SEFE company, Germany's EnBW company, and Japan's Osaka Gas company, totaling 3.4 million tons per year.
Develop a global natural gas strategic layout. Abu Dhabi National Oil Company is accelerating the pace of building a global core natural gas asset portfolio. In August 2023, the company announced the acquisition of a 30% stake in Azerbaijan's Absheron gas field, achieving a strategic layout in the Caspian Sea region; In February 2024, the company announced the establishment of an Egyptian joint venture with BP at a ratio of 49:51% to jointly explore and develop natural gas in the eastern Mediterranean of Egypt; In May 2024, the company announced the acquisition of an 11.7% stake in NextDecade's LNG Phase I project located in Rio Grande, Texas, USA, to expand its business in the Gulf of Mexico; In the same month, it announced the acquisition of 10% equity in Block 4 of the Rovuma Basin in Mozambique by Portugal's Galp Energy Company, laying out oil and gas business in the East African waters.
Chinese enterprises should seize opportunities to expand cooperation with Afghanistan's natural gas industry
Actively seize the development opportunities of the UAE's natural gas industry. The natural gas industry in the United Arab Emirates is in a period of rapid development, and Chinese companies should seize the opportunity in a timely manner to expand strategic cooperation with the UAE in the natural gas field. Closely monitor opportunities for LNG integration cooperation, while ensuring downstream market space and reasonable sales prices, leverage domestic market advantages to promote LNG trade cooperation, and seek project cooperation opportunities for natural gas exploration and development, LNG liquefaction export terminals, and downstream to drive upstream. Select partners with strong exploration capabilities and good performance, and increase exploration efforts in the UAE waters at the right time. Utilize the advantages of domestic unconventional natural gas exploration and development technology, explore the layout of unconventional natural gas cooperation in the UAE, and strive to become an operator. Strengthen cooperation in natural gas exploration and development services and engineering construction, and study the feasibility of cooperation in natural gas chemical industry, natural gas to blue hydrogen blue ammonia and other fields.
Strengthen the top-level design of cooperation with UAE natural gas. Chinese enterprises should actively participate in the energy cooperation mechanism between the Chinese and Arab governments, strengthen communication and contact with the UAE, express their willingness to cooperate through signing memorandums of cooperation and other forms, showcase their domestic natural gas exploration and development technology strength and achievements, and create a positive and friendly atmosphere for cooperation. Research and formulate an integrated development strategy plan, effectively leverage the advantages of Chinese enterprises, especially the domestic market advantages and unique technological advantages of domestic upstream, and combine with the development demands of UAE natural gas to strive for the best cooperation effect. Studying and drawing on the beneficial practices of the UAE's global natural gas strategy layout, Abu Dhabi National Oil Company will be selected as a strategic partner to seek cooperation in natural gas business layout in third countries.
Intensify efforts in basic research and technological breakthroughs in natural gas. Chinese companies should increase their efforts in basic research on the strategic selection of natural gas resources in the United Arab Emirates, clarify the natural gas resource foundation, enrichment patterns, and exploration and development potential, and lay the foundation for screening and evaluating natural gas project opportunities. Targeting the unconventional natural gas and acidic natural gas fields in the United Arab Emirates, combined with existing exploration and development technologies in upstream China, targeted scientific and technological breakthroughs will be carried out to transform technical capabilities into market share and economic benefits. Focusing on the natural gas field in the waters of the United Arab Emirates, priority will be given to cultivating the ability to evaluate and make decisions on natural gas projects in the waters, as well as technical and business management capabilities, and steadily cultivating the abilities of operators.
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