ADNOC Gas raises 2025 sales outlook as hot weather welcomed

ADNOC Gas raised its outlook for 2025 sales, with first-quarter revenue rising 1% from a year earlier to nearly $6.1 billion, as volume is set to receive a seasonal boost from hot summer weather and higher air conditioning demand at power plants.

Total sales this year, excluding sulfur, are expected to reach 3,555-3,605 TBtu, up from a previous estimate of 3,460-3,585 TBtu, the company said in a statement May 5.

Estimates for domestic gas products, exports and traded liquids, as well as LNG JV products, have all been raised from the previous forecast in February.

"As with prior years, sales volumes should follow a seasonal pattern, with an uptick over the summer period," the company said. "Furthermore, it is important to note that in 2025, our shutdown activity will be higher than normal and will continue through the remainder of the year."

Hot summer weather has arrived early in the Middle East, with temperatures already exceeding 100 F in Dubai. Demand for natural gas, crude oil and fuel oil peaks during the summer as power plants try to keep up with air conditioning usage.

"It is getting warmer, as you rightly say, and that has a positive impact on our bottom line," CFO Peter van Driel told reporters on a call. "It is not that different from, I think, what you have seen in previous years. So it is nothing new. But I would welcome a warm sunny day because the power plants that cool your homes need simply more gas as their feedstock. So we will see how that plays out. But it is a positive."

New projects at ADNOC Gas will increase total capital expenditures to about $3 billion in 2025, compared with the previously estimated range of $3 billion-$3.5 billion. Capex totaled $1.835 billion last year.

The company outlined five major growth projects, with the IGD-E2 integrated gas development expected to add 370 MMcf/d of capacity this year. MERAM, designed to extract ethane for petrochemicals at Habshan, is projected to add 3.4 million mt/year by 2026, while up to 2.2 million mt/year of MERAM's output may be supplied to ADNOC Gas' sister company, Borouge, for its fourth cracker.

The other 1.2 million mt/year would be allocated to exports, which are "very attractive to us because the margins are higher," Van Driel said.

Additionally, Ruwais LNG is in the works, with an export capacity of 9.6 million mt/year expected by 2028. About 80% of the capacity is already secured. The fourth project, Bab Gas Cap, is set to add another 1.85 Bcf/d of capacity by at least 2029.

In total, ADNOC Gas could spend $15 billion on new projects, primarily in the latter part of the next five years.

In addition to the $15 billion, a "rich gas development" project is under consideration to add at least 1.5 Bcf/d of production capacity, compared with the current capacity of about 10 Bcf/d, Van Driel said.

The final investment decision is on track for this summer, with the project expected to be ready by late 2027, he added. The total investment could range $4 billion-$5 billion for a new train at Habshan and for the new Train 5 at Ruwais for fractionation.

The RGD project could potentially involve three sections, including debottlenecking at almost all of its facilities, including Habshan. The debottlenecking alone will cost $4 billion, and "it is not clear yet how much the investment in the additional processing and additional fractionation train will be. But if we take a positive decision on that, it is going to be a sizeable investment," Van Driel said.

The RGD project is important because ADNOC's parent company, Abu Dhabi National Oil Co., is producing more oil and gas, the CFO said.

"In order to produce more oil and gas, you need to be able to process the gas that comes from the increased production. And as upstream ADNOC is ramping up its production, we see more gas coming through our infrastructure." That is at least 1.5 Bcf/d, he added.

The seventh train at Habshan is also possible, Van Driel said.

ADNOC, which pumps most of the UAE's oil, aims to increase its crude production capacity to 5 million b/d by 2027 from the current 4.85 million b/d of oil and 11.5 Bcf/d of gas.

In March, the UAE's crude output was 3.05 million b/d, according to the latest Platts OPEC+ survey by S&P Global Commodity Insights. Production will rise further as OPEC+ permits increased output.

If ADNOC is producing more oil, it comes with more gas, Van Driel said.

"If I would not have the facilities ready to process that additional gas, I may negatively impact their oil production," he said. So both ADNOC Gas and ADNOC are producing more gas at the same time that demand is going up in the UAE. "So it is a perfect storm, whatever the expression is. All stars are aligned," he added.

The guidance for exports and traded liquids was based on a Brent price of $60-$70/b, FOB Europe, down from $70-$80/b stated in February, the company said. Platts, part of Commodity Insights, assessed Dated Brent at $61.41/b on May 2.

The company also uses Platts-assessed LNG prices for Asia. The JKM benchmark rose 23% in the first quarter from a year earlier to $15/MMBtu, it said. Platts assessed the price at $11.12/MMBtu on May 2.

The company said it "sold forward the bulk of FY25 spot cargoes in response to a strong LNG pricing environment" and that "market appetite for LNG remains high."

Domestic gas sales rose to $1.76 billion from $1.72 billion a year earlier, while export traded liquids revenue increased to $3.44 billion from $3.41 billion. LNG JV revenue fell to $826 million from $841 million, and sulfur revenue jumped to $55 million from $20 million over the same period.

Propane, FOB Saudi Arabia contract price, was little changed at $625/mt in the first quarter, compared with $627/mt in the same period last year, while butane, FOB Saudi Arabia CP, dropped 3% to $637/mt over the same period. It uses Arab Gulf prices for naphtha.