Adnoc Gas flags higher capex with profit and expansion push

Abu Dhabi’s ADNOC Gas signalled a marked increase in investment alongside a record financial performance, projecting capital expenditure of $4 billion to $4.5 billion for this year and laying groundwork for expanded processing capacity across key facilities as it pursues its multi-phase Rich Gas Development project. The state-owned company reported full-year net income of $5.2 billion for 2025, a 3 per cent rise from the prior year, underscoring robust earnings despite pressure from lower crude prices and a challenging global energy outlook. The stronger balance sheet and elevated capex guidance reflect a strategic shift towards infrastructure growth while maintaining shareholder returns.

Chief Financial Officer Peter van Driel said on the company’s earnings call that 2026 capex will build on a $3.6 billion spend in 2025, which nearly doubled from the year before as major expansion programmes gathered pace. The elevated investment plan anticipates a possible further increase once Final Investment Decisions are taken on Phases 2 and 3 of the RGD project, which aims to expand processing at Habshan, Das Island, Asab and Buhasa. Those phases, if approved, are expected to add roughly $8 billion to committed capital outlays and be distributed over a two-to-three-year execution period.

The Rich Gas Development initiative, already under way with the first phase sanctioned and under contract, is central to ADNOC Gas’s long-term strategy to boost capacity by about 30 per cent by 2029, moving throughput from around 10 billion cubic feet per day to an estimated 13 billion cubic feet. Van Driel emphasised that part of the capacity increase stems from debottlenecking existing infrastructure, enhancing the firm’s ability to absorb future upstream growth.

The 2025 results showed resilience in earnings driven by domestic demand and improved commercial terms, even as average Brent crude prices softened. EBITDA in the domestic gas segment rose by about 10 per cent, supported by a 4 per cent increase in sales volumes, and the company confirmed a full-year dividend commitment of $3.584 billion to shareholders. Fourth-quarter net income stood at about $1.2 billion, reflecting ongoing demand strength in the UAE’s industrial and utility sectors despite softer export pricing conditions.

Analysts and company executives alike view the higher capex as a pivot from harvesting cash to building long-term capacity, a strategy that carries execution risk but is rooted in anticipated demand growth. ADNOC Gas expects annual gas demand to expand in line with GDP and industrialisation trends, with a notable uplift from infrastructure and energy projects that support broader economic diversification in the UAE. Van Driel noted that while the energy mix will evolve, gas will remain a key component of the country’s supply landscape alongside renewables.

The company’s broader portfolio also includes the Ruwais LNG project, a low-carbon-intensity facility with a 9.6 million tonnes-per-annum capacity. ADNOC Gas is set to acquire a 60 per cent stake from its parent in the second half of 2028, an investment that is expected to have a major financial impact after the transfer while maintaining planned commissioning dates for the processing and fractionation trains.

Operational partnerships have been tested during the expansion phase; contracts worth more than $2 billion were awarded to UK-based Petrofac and others for key processing facilities, and despite financial challenges faced by Petrofac’s holding company, on-site performance has continued according to plan, the company said.

Executive commentary from the company emphasises a balanced approach to delivering shareholder returns while funding growth. Van Driel noted the company’s zero-debt position aside from working capital facilities, which supports both dividend stability and investment in strategic assets without undue financial strain.