Seatrade-Maritime: Abu Dhabi bets on gas growth despite Hormuz blockade

Published by Seatrade-Maritime

ADNOC has committed to a $6.2bn Final Investment Decision (FID) for the Umm Shaif Gas Cap, a move they say will unlock more than 600m standard cubic feet per day (scfd) of gas resources from Abu Dhabi’s oldest offshore field.

The decision comes despite extreme pressure on LNG production and export in the Arabian Gulf due to the ongoing US-Iran conflict and the effective closure of the Strait of Hormuz to LNG carriers, which has isolated the UAE and Qatar from export markets.

Abu Dhabi’s state-owned oil company ADNOC holds a 60% stake in, and is the field operator at, the Umm Shaif and Nasr offshore concession where the development will take place, alongside TotalEnergies with 20% ownership, China National Petroleum Corporation (CNPC) with 10% and ENI with 10%.

Production from the project is expected to come online in 2030, said ADNOC.

The latest commitment adds to a series of LNG-focused deals in the UAE, including the launch of an LNG marketing and trading platform combining the marketing activities at ADNOC Gas, XRG, and ADNOC Trading, with a target of 47m tonnes per annum of combined marketable LNG by 2035.

Market challenges

Getting LNG to market is a current challenge for gas producers in the Gulf. Risk in the region is currently escalated amid ongoing tit-for-tat attacks between the US and Iran.

If and when the situation cools again, LNG carrier owners and operators are likely to remain cautious after Nakalit’s laden LNG carrier Al Rekayyat was struck off Oman in early July.

The recovery in LNG carrier transit numbers through Hormuz lagged tankers during the period of calm in the Strait after the signing of the US-Iran peace MoU in June. The series of Iranian attacks on vessels including Al Rekayyat halted and reversed the recovery in transit numbers seen since the MoU signing, and little LNG has flowed since.

On 21 July, Clarksons Research head of global research, Steven Gordon, said no Qatari LNG carriers had transited the Strait in almost two weeks.

The resumption of Hormuz transits may bring a sudden surge of exports as laden LNG carriers in the Gulf are released, but after the impacts of war, regional production will not reach full pre-conflict volumes of around 20% of global supply.

Qatar was the world’s second-largest exporter of LNG at 81.5 mt or almost 19% of global exports in 2025, but export capacity at QatarEnergy was cut by 17% in March after missile strikes hit Ras Laffan Industrial City early in the US-Iran conflict. Repair estimates for the damaged infrastructure were in the three to five year range, QatarEnergy said at the time. During the brief period of peace in June, QatarEnergy said it would take around one month to reach 50% of its LNG production capacity at Ras Laffan, and two months to hit 80%.

Importer challenges

Pressure on the LNG trades are reflected in global markets, with Europe and Asia facing challenges.

At a critical stocking up period in Europe, gas storage levels of 54.2% of capacity for 20 July were well down on the five-year average of 69.5% and last year’s 65.7%. After ending last winter at lows of around 28% capacity in March, restocking rates have faced resistance from reduced exports out of the Middle East, higher gas prices, and local demand for energy during a prolonged heatwave.

Speaking at the company’s earnings results call on 22 July, Equinor CFO Torgrim Reitan said the European gas situation is “vulnerable”, and Europe may enter the autumn/winter period with “large uncertainties” as it competes with Asia for gas volumes.

Equinor does not expect Europe will hit its 80% storage capacity target ahead of winter, and warned of further pressure next year when Russian gas will stop entering Europe via pipeline — storage levels permitting.

Europe and Asia both face broadly similar challenges after hot summers boosted energy demand for cooling.

Bloomberg reported on 22 July that Asian buyers were paying spot market prices for LNG at almost double the price of long-term arrangements with Qatar that have been cancelled due to the attacks on Ras Laffan.