Abu Dhabi National Oil Company has made its first foray into Mozambique after acquiring a 10% stake in Galp’s Area 4 natural gas concession in the southern African country's Rovuma basin, the state-run UAE energy firm said Wednesday.
The deal will give ADNOC a share of the liquified natural gas output from the concession, which has a combined capacity of over 25 million metric tons per year, the company said in a statement. ADNOC did not disclose the value of the stake.
The Area 4 concession includes the operation Coral South Floating LNG facility, the planned Coral North Floating LNG facility and the planned Rovuma LNG onshore sites. Each Coral facility will be capable of producing 3.5 million metric tons of LNG per year.
Galp said in a statement that it would receive around $650 million for its shares and shareholder loans net of capital gain taxes when the deal is expected to be completed later in 2024.
"Additional contingent payments of $100 million and $400 million will be payable with the final investment decision of Coral North and Rovuma LNG, respectively," Galp added.
The stake in the project "complements ADNOC's efforts to expand its lower-carbon LNG portfolio to meet growing gas demand" and support the energy transition, the Gulf energy firm said.
ADNOC's Executive Director for Low Carbon Solutions and International Growth Musabbeh Al Kaabi said, “Natural gas plays an important role to meet growing global demand with lower emissions compared to other fossil fuels and this acquisition supports our efforts to build an integrated global gas business to ensure we continue providing a secure, reliable and responsible supply of natural gas.”
At 18 million metric tons per year, the Rovuma Onshore LNG development will dramatically reduce the carbon intensity of the LNG it produces compared to industry benchmarks, ADNOC said.
Mozambique’s giant Rovuma gas basin represents one of the world’s largest gas discoveries in the past 15 years. It holds proven reserves to provide a stable supply of natural gas to the floating LNG and onshore facilities, the UAE company said.
The investment marks ADNOC's fourth international foray into gas. ADNOC is doubling down on gas and LNG production and is on the hunt for LNG assets in Africa, the United States and beyond. On Monday, the company announced its first-ever investment in US LNG with an 11.7% stake in NextDecade's Phase 1 Rio Grande LNG project in Texas.
ADNOC is also reportedly mulling setting up a gas trading desk in the United States after setting up one in Geneva, Switzerland.
ADNOC sees gas and LNG, along with renewable energy and petrochemicals, as main areas of future growth as dirtier fuels like oil become more obsolete in the global climate transition. European demand for LNG has soared since Russia, a key source of the continent's energy, invaded Ukraine in February 2022. Following Russia attacking its neighbor, the European Union, United States and other Western countries imposed sanctions on Moscow, including on energy imports, meaning that Europe has had to turn to different sources for its gas.
