What is the strategy behind Adnoc’s two recent gas deals?

Abu Dhabi National Oil Company yesterday awarded a 25 per cent stake to Italy’s Eni in a multibillion dollar sour-gas concession. This came a day after Adnoc signed an agreement with Saudi Aramco to jointly explore and invest in natural gas and liquefied natural gas opportunities. The two deals, signed during the Abu Dhabi International Petroleum Exhibition and Conference, are part of the emirate’s plans to achieve gas self-sufficiency, broaden its revenue base and free up more crude for exports.

What is natural gas?

It is found deep beneath the Earth’s surface, mainly consisting of methane and is used as fuel to fire power plants and in industries to make materials and chemicals. Earlier this month, Abu Dhabi announced it found 15 trillion cubic feet of gas in existing and untapped blocks. The discoveries would add 7.1 per cent to existing reserves, which stood at about 209.7 trillion cubic feet at the end of 2017, according to the BP Statistical Review of World Energy. Bahrain in April said it found up to 20 trillion cubic feet of gas offshore.

What is LNG?

Liquefied natural gas is natural gas that has been cooled to a liquid state, at about minus 127°C, for shipping and storage. The volume of gas in its liquid state is about 600 times smaller than its volume in its gaseous state. This process makes it possible to transport gas mainly through large ships/ tankers called LNG carriers that are equipped with onboard, super-cooled tanks. On reaching its destination, LNG is warmed and used for heating, cooking, electricity generation and other industrial purposes.

What is tight gas?

Tight gas commonly refers to deposits with low permeability. The technology used to extract gas from sandstone formations is the same as that used to produce gas from carbonates and coal seams. The biggest challenge for producers in tight gas reservoirs is to produce enough gas volumes to make economic sense.

What is sour gas?

Sour gas fields contain a high level of sulphur, which needs to be extracted to produce gas for commercial consumption.

What is condensate?

It is a light hydrocarbon liquid produced with gas. Condensate fetches a higher price than normal crude because it is easier to refine into a by-product.