Adnoc is building more gas capacity, but demand is moving just as fast

Adnoc is turning to unconventional gas to help close the UAE’s supply gap. The state oil major has taken a final investment decision (FID) on Ruwais Diyab, its first large-scale unconventional gas development, which is projected to produce 345 mmcf / d of raw gas over 25 years, according to a press release. Output could eventually rise to 1 bcf / d, though Adnoc hasn’t committed to that level or disclosed the investment value.

Why it matters: The UAE still imports gas to meet domestic demand. Its supply deficit was an estimated 17.7 bn cbm last year, or about 1.7 bcf / d, based on its submissions to Opec, Kate Dourian, a board member at the Energy Institute’s Middle East branch, tells us. Qatari gas through the Dolphin pipeline and about 500k tons of LNG imported through Dubai covered part of that gap, with Ruwais Diyab’s first phase expected to cover about a fifth of that gap.

And demand may grow faster than planned: Adnoc Gas projects domestic gas demand growing 4-5% a year between 2023 and 2030. That forecast may be conservative because it excludes planned AI data centers, Dourian says. Recent awards, including the Bab and Umm Shaif gas caps, will help narrow the deficit, though more production will still be needed, she adds.

A third of the target

Ruwais Diyab has been producing on a small scale since 2020: Adnoc and TotalEnergies delivered first unconventional gas from the concession that year, with a target of 1 bcf / d before 2030. Output reached about 100 mmcf / d by February 2025, TotalEnergies CEO Patrick Pouyanné told the Middle East Economic Survey (Mees). TotalEnergies cut its stake to 10% from 40% in 2023, leaving Adnoc with 90% and operatorship.

The next phase starts in 2029 at about a third of that target. Adnoc Onshore will develop it under a design-build-operate model. The gas will be processed on site, then fed into the national network through new pipelines. That network is expanding too: the USD 2.4 bn Estidama project will extend it to more than 3.5k km from 3.2k km.

Paying for security

Unconventional gas costs more to produce. That raises questions about the returns from scaling it up, Dourian says, though the push to end imports is also about energy security and less exposure to swings in international gas prices. Foreign partners in several UAE gas developments also let Adnoc share capital requirements and development risk, she adds.

Adnoc is likely to sell the gas at home and abroad: “Ultimately, the stronger return will depend on production costs, domestic gas pricing, and the prices Adnoc can secure for LNG exports. LNG may offer greater commercial returns when international prices are high, but supplying the domestic market offers longer-term economic and strategic benefits. Adnoc is therefore likely to pursue both rather than favor one at the expense of the other,” Dourian says.

Most of its LNG is already spoken for: A wave of new global supply is due around 2028, when the Ruwais LNG plant goes online, which could mean lower international prices and tighter margins, Dourian says. Adnoc has already secured long-term sales for more than 90% of Ruwais LNG’s planned capacity, limiting its exposure to spot prices, she adds.

More gas coming

Ruwais Diyab is one of several projects aimed at the same goal: Adnoc has committed USD 6.2 bn to the Umm Shaif gas cap, which is expected to add more than 600 mmcf / d from 2030. Adnoc Gas is advancing its USD 13.2 bn Rich Gas Development program, including a new processing train at Habshan and an NGL fractionation train at Ruwais.

Dourian sees one target behind all of them. “I think all the gas developments in the UAE, including sour and unconventional gas, are about attaining self-sufficiency and ending reliance on imports by 2030,” she says.

What’s next: Ruwais LNG is due to start in 2028, Ruwais Diyab’s next phase comes online in 2029, and Umm Shaif adds gas from 2030.