Saudi Aramco and Abu Dhabi National Oil Company (Adnoc) have signed a framework agreement for potential collaboration across their gas value chain, the two state energy giants said on 12 November.

The agreement, announced at the Abu Dhabi International Petroleum Exhibition and Conference covers opportunities both in the region and internationally, the two companies said.

Both countries face challenges with gas. The UAE already imports gas from Qatar through the Dolphin pipeline for use in power generation, as well as liquefied natural gas (LNG).

Adnoc CEO Sultan al-Jaber said his company was setting out to access Abu Dhabi’s undeveloped reservoirs, and further capitalise on its technically challenging sour gas fields.

He signed a contract earlier in November with French oil major Total to jointly develop unconventional fields in a concession partnership.

“Our strategy will ensure we remain a reliable supplier of LNG well into the future,” Al-Jaber said.

Saudi Arabia produces around 14 billion cubic feet a day (cf/d) of gas, and hopes to nearly double its output to 23 billion cf/d. This will help it lift the share of gas in the power generation mix to 75 per cent, up from the current 55 per cent.

The kingdom is also considering LNG imports for the first time. Both would help free up crude oil for export rather than being burned for power inside Saudi Arabia.

Rare cooperation

The deal is one of the first examples of international cooperation between national oil companies from the Gulf. Another is Kuwait’s joint development of the 230,000 b/d Duqm refinery in Oman, along with Oman Oil Company. The Duqm project is expected to be completed in 2021.

Although few details were revealed, this is latest agreement between Aramco and Adnoc, following their planned joint development of a new 1.2 million barrels a day (b/d) refinery in India.

Aramco signed an initial deal with India’s state owned oil companies in April to jointly develop the Ratnagiri refinery and petrochemicals complex on the country’s west coast.

Adnoc joined the project in June, taking half of Aramco’s 50 per cent share in the project.

Work on the new refinery in the western state of Maharashtra, will start in a phased manner and the entire project is expected to be completed by 2025.

Saudi Arabia and the UAE are both key crude oil and liquid petroleum gas suppliers to India.

Investing in the country is another step in Abu Dhabi's increasingly close ties to India, and Indian oil companies were among the first to be awarded stakes in Abu Dhabi's offshore concessions earlier this year.