Adnoc doubles down on US natgas push

Adnoc is still committed to its US gas push: The state-backed giant is lining up tens of bns in USD to develop its natural gas business in the US through its overseas investment arm XRG, XRG’s Chief Investment Officer Nameer Siddiqui told the Financial Times.

Some 29 potential agreements — including controlled transactions, drilling joint ventures, and minority stakes — are currently under review, Siddiqui said. These include projects covering production, pipelines, processing, liquefaction, and potentially regasification and pipeline infrastructure.

“The US is a market where we want to be bold,” Siddiqui noted, adding that “this is unwavering, although obviously we will only do that under the right return expectations.”

This isn’t new — but it’s important given the timing and regional context. The oil giant has been planning to increase its US investments to USD 440 bn over the next decade, with USD 60 bn worth of investment agreements signed last year to develop existing oil and gas fields as well as explore new ones. It also said it is eyeing USD 9 bn worth of natural gas asset acquisitions. XRG also took an 11.7% stake in the first phase of NextDecade’s USD 18 bn Rio Grande LNG export facility in Texas last year — marking its first direct investment in US gas infrastructure.

Timing? There could be a bigger opening for a deep-pocketed Middle Eastern player as banks are stepping back from the US LNG market over fears of global oversupply, Alex Munton, director of global gas at Rapidan Energy Group, told the FT.

Plus: Recent regional headwinds have made global exposure and hedging all the more critical as supply chains here at home become more difficult to manage. Adnoc has been relying on its Habshan-Fujairah pipeline to get some of its crude out, but the pipeline only has capacity for about half of its usual volume of crude exports. The company has since also had to rely on overseas storage to get crude to markets like South Korea.

For Adnoc, more US (and natgas) exposure builds optionality to its portfolio and helps realize its diversification and lower-carbon targets. XRG has been building a global platform, backed by its parent firm’s USD 150 bn capex budget through 2030, targeting a top-five global position in gas and petrochemicals. It has nearly doubled its enterprise value to USD 151 bn and recently closed a EUR 14.7 bn takeover of Germany’s Covestro.

And the focus is now purely on natural gas, after ExxonMobil put its proposed low-carbon hydrogen facility in Texas — where XRG was set to acquire a 35% stake — on hold.