Abu Dhabi’s ADNOC is likely to become one of the top four producers of liquefied natural gas (LNG) in the world after its recent proposal to acquire Australia’s Santos in an all-cash deal of $18.7 billion.
ADNOC made the proposal earlier this week through its investment arm XRG, along with Abu Dhabi Development Holding Company (ADQ) and private equity firm Carlyle. Santos would give access to production and export of LNG to the fast-growing Asian markets.
ADNOC’s Santos deal boosts LNG
Speaking to Bloomberg, Bernstein analyst Neil Beveridge said: “Abu Dhabi is long oil, but is seeking to be a more material player in LNG markets. The acquisition of Santos would help enable ADNOC to become a bigger LNG player in key growth markets in Asia.”
The added production capacity, once the deal gets regulatory approvals, will thrust ADNOC into the ranks of oil majors Shell and Exxon Mobil in terms of LNG production and exports, Bernstein analysts told Bloomberg.
ADNOC will rival the two Houston-based American oil majors, and only trail Qatar Energy, which currently has a production capacity of 77 million tonnes per annum (mtpa), which it intends to increase to 160mtpa by 2030, and the US-based Cheniere Energy, which has a total production capacity of over 46mtpa.
Apart from Santos’ acquisition, ADNOC is also expecting its Ruwais LNG Project, which is scheduled to become operational in 2028, to more than double ADNOC Gas’ current LNG production capacity to more than 15mtpa. Santos’ capacity is set to reach 7.5mtpa once Australia’s huge Barossa LNG project starts later this year.
In its LNG Outlook 2025, Shell said that global demand is forecast to rise by around 60 per cent by 2040, largely driven by economic growth in Asia, emissions reductions in heavy industry and transport as well as the impact of artificial intelligence.
The expected acquisition of Santos will give ADNOC solid access to the Asian market.
XRG is the investment unit founded by ADNOC in November with an enterprise value of US$80 billion. It plans to double that in a decade and become ADNOC’s international gas and chemicals arm.
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