Shell Invests in Abu Dhabi's Ruwais LNG Project, Eyes Expansion in Global LNG Portfolio
(P&GJ) — Shell Overseas Holdings Ltd. has announced plans to invest in ADNOC’s Ruwais LNG project, securing a 10% participating interest in the venture.
This decision strengthens Shell's longstanding partnership with ADNOC and aligns with its strategic focus on enhancing LNG capacity while reducing emissions.
"This investment decision builds on our long-standing partnership with ADNOC," said Wael Sawan, CEO of Shell. "In line with our strategy to create more value with less emissions, we are investing in additional LNG capacity and further growing our world-leading LNG portfolio, with energy-efficient and carbon-competitive projects."
The Ruwais LNG project will feature two liquefaction trains, each with a capacity of 4.8 million metric tonnes per annum (MTPA), totaling 9.6 MTPA. Shell, through its subsidiary Shell International Trading Middle East Limited FZE, has also secured an agreement to offtake 1 MTPA of LNG produced by the project. Notably, the facility will employ an electric-powered liquefaction system, leveraging access to renewable power sources to minimize operational emissions compared to traditional gas-powered LNG facilities.
ADNOC retains a majority 60% stake in the project and will lead its development and operation. Shell, alongside BP, Mitsui, and TotalEnergies, will each hold a 10% interest in the venture.
The engineering, procurement, and construction (EPC) contract for the Ruwais LNG project has been awarded to a Technip-led joint venture. Construction is set to commence soon in Al Ruwais Industrial City, Abu Dhabi, with LNG deliveries expected to commence in 2028.
Shell's participation in the Ruwais LNG project underscores its commitment to expanding liquefaction volumes, aiming for a 25-30% growth relative to 2022, as outlined during the 2023 Capital Markets Day. The investment aligns with Shell's strategy amidst projections of a 50% increase in global LNG demand by 2040, driven by coal-to-gas switching in key markets such as China and Southeast Asia.
Shell believes LNG will play a crucial role in the energy transition, displacing coal in heavy industry and power generation to reduce local air pollution and carbon emissions. This strategic move supports Shell's Energy Transition Strategy 2024, emphasizing the flexibility LNG provides to complement renewable energy generation.
The capital investment associated with Shell's 10% stake in the Ruwais LNG project will be managed within its existing cash capital expenditure guidance, maintaining financial discipline while pursuing growth opportunities in integrated gas operations.
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