The Gas Rush: UAE awards $3.6bn contract to expand processing infrastructure

Spanish firm has grabbed the investment opportunity

DUBAI (Reuters/Web Desk) – As countries from around the globe are rushing to secure energy security through long-term deals, the gas producers eye expanding their production facilities so that they can keep pace with demand.

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The United Arab Emirates is one of them as the state oil giant Abu Dhabi National Oil Company's gas unit, ADNOC Gas, said on Wednesday it awarded a $3.6 billion contract to expand its processing infrastructure in the country.

The contract was given to a joint venture between National Petroleum Construction Company Co PJSC (NPCC), owned by Abu Dhabi state fund ADQ, and Spain's Tecnicas Reunidas, ADNOC Gas said in a statement.

The new gas processing facilities will allow an "optimized supply" to the Ruwais Industrial Complex in Abu Dhabi's western Al Dhafra region.

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ADNOC Gas' Maximizing Ethane Recovery and Monetization project aims to boost ethane extraction by 35 per cent-40 per cent from its onshore facilities in the Habshan complex by building new processing facilities, as well as "unlock further value" from existing feedstock, delivering it to Ruwais through a 120-km (75 miles) natural gas liquids pipeline, the firm added.

ADNOC said over 70pc of the contract's value would "flow back into the UAE's economy".

Last month, the ADNOC announced a 14-year $7 billion to $9 billion deal with Indian Oil Corp to supply 1.2 million metric tonnes of liquefied natural gas (LNG) per year – one of the several long-term agreements signed with other countries.

At the same time, the ADNOC is expanding its portfolio and has approached German plastics and chemicals maker Covestro AG with a takeover proposal worth more than 10 billion euros ($10.9 billion), a person familiar with the matter said.

Read more: Abu Dhabi's ADNOC in almost $11bn approach for Covestro

Meanwhile, the Gulf State is also working on diversification of its economy as Prime Minister Fumio Kishida's recent visit to the Middle East led to a flurry of agreements for studies that Japan hopes will encourage key countries in the region to become hydrogen partners in a push for renewable energy.