UAE Oil Giant Adnoc Acquires Stake in Texas LNG Project

The United Arab Emirates' leading oil company, Abu Dhabi National Oil Co. (Adnoc), has made its first acquisition in the United States by purchasing a stake in NextDecade Corp.'s natural gas export project in Texas. This deal also includes a 20-year supply agreement.

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Adnoc will acquire an 11.7% stake in the first phase of the Rio Grande LNG project, securing 1.9 million tons of liquefied natural gas (LNG) annually from the future Train 4. Following this announcement, NextDecade's shares rose by 7.5% in pre-market trading.

Expanding Global Reach

Adnoc has been actively seeking global assets to expand its market reach. The company is currently negotiating to purchase a chemical firm in Europe and aims to merge one of its units with an Austrian OMV AG subsidiary to form a $30 billion petrochemical giant. This move aligns with Saudi Aramco’s global expansion efforts, which recently included the acquisition of an Australian LNG company.

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“As global energy demand increases, Adnoc is diversifying our energy portfolio to ensure a secure, reliable, and responsible supply of energy,” said Musabbeh Al Kaabi, Adnoc’s Executive Director for International Growth.

Strategic Investment

Adnoc’s investment in the Rio Grande project grants it access to the first three production units, or "trains," with a combined capacity of 17.61 million tons per year. Construction on the first train is already underway. Adnoc acquired its stake from Global Infrastructure Partners.

The UAE is leveraging its oil wealth to transform Adnoc into a global energy powerhouse. Alongside other Middle Eastern countries like Saudi Arabia and Qatar, the UAE is investing significantly in gas, which is considered a key transitional fuel in the shift towards sustainable energy. The UAE aims to achieve self-sufficiency in gas by 2030 through both domestic exploration and international acquisitions.

Key Partnerships

NextDecade’s shareholders include France’s TotalEnergies SE and Mubadala Development Co., an investment fund owned by the Abu Dhabi government. TotalEnergies holds a 17.4% stake in the Houston-based developer, while Mubadala owns about 5.5%. Both entities, along with Global Infrastructure Partners and Adnoc, are involved in the first phase of the Rio Grande project.

NextDecade plans to make a final investment decision on Train 4 in the latter half of 2024. The project already has the necessary license to proceed, which mitigates the impact of the Biden administration's temporary halt on new LNG export approvals. Adnoc also has the option to invest in the future Trains 4 and 5 of the Rio Grande project.

While Adnoc did not disclose the financial details of the US transaction, nor the start dates for the project's operations or fuel supply deliveries, it has announced plans to build its own LNG export facility in the UAE.

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