Feature: ADNOC eyes Africa amid UAE diplomatic push

Abu Dhabi state-owned oil company ADNOC has quietly grown its position in Africa through its acquisition of a minority stake in Austria-headquartered OMV earlier this year, adding to its existing portfolio of investments in the continent, at a time when the UAE is boosting its own diplomatic investments across the region.

ADNOC's direct assets in Africa include a 10% stake in ExxonMobil and Eni’s 15.2 million metric ton/year Rovuma LNG project in Mozambique, as well as interests in oil and gas fields in Egypt.

It is also in talks with Libya's NOC -- alongside Italy’s Eni and France’s TotalEnergies -- to explore and develop the huge NC-7 gas field in the Ghadames basin, according to three sources familiar with the matter.

Sources have also told S&P Global Commodity Insights that ADNOC was eyeing upstream investments in new oil producer Senegal and OPEC member Republic of Congo.

Meanwhile, ADNOC's purchase of a minority stake in OMV in February, from the UAE’s sovereign investment firm Mubadala, has also boosted its indirect foothold elsewhere in the continent.

Its direct and indirect holdings now also comprise minority stakes in upstream projects, pipelines and plants -- including ammonia, electric, LNG, and gas processing plants -- across Egypt, Ethiopia, Tunisia, Mozambique, South Africa, Kenya and Libya, according to data from S&P Global Commodity Insights.

ADNOC declined to comment on the matter Aug. 15.

When contacted to confirm that ADNOC's acquisition of OMV would give the UAE company indirect stakes in Libyan and Tunisian oil fields, an OMV representative directed Commodity Insights to ADNOC. The UAE company said it would not comment further on the matter.

Geographical diversification

Analysts said the Africa expansion has several motivations, including allowing ADNOC to meet captive energy demand in Africa -- where some 600 million go without electricity -- as well as opening new supply to Europe, and strengthening UAE interests.

"There’s clearly an incentive for major oil and gas producers to diversify where they can and that also includes geographically," said Andrew Farrand, MENA director at Horizon Engage. "The UAE clearly has plenty of resources at home but when you have the [Yemeni] Houthis closing the Bab-el-Mandeb strait, it suddenly becomes interesting for the UAE to have assets in the Med so it can serve European demand even if certain shipping lanes close."

The UAE pumped 2.99 million b/d in July 2024, according to the latest Platts OPEC+ Survey from Commodity Insights, with ADNOC making up the lion’s share. But the country’s hydrocarbons capacity is expected to halve between 2030 and 2050, according to Commodity Insights forecasts.

"The UAE is looking for both clean and traditional energy sources in Africa, hoping to develop the energy sector across the continent and by extension bring investment returns home," said Ryan Bohl, senior MENA analyst at the RANE Network. "Helping to develop Africa's energy sector are potentially long-term returns that the country could benefit from for years to come."

Indeed, the focus is not solely on Africa; this year ADNOC made its first US investment in NextDecade's Rio Grande LNG project in Texas.

Diplomatic partners

The UAE has become one of Africa’s biggest diplomatic, investment and trading partners in the past decade, as the oil-rich Gulf state has sought to establish itself as an influential middle power.

Initially, the UAE focused on the coasts, with DP World and AD Ports constructing ports from Berbera in Somaliland to Banana in the Democratic Republic of Congo. Meanwhile, Emirati military bases popped up across the Horn of Africa, from which it deployed to nearby Yemen, as well as in Libya, where the UAE supported eastern warlord Khalifa Haftar.

Ports and military bases helped protect UAE interests, including the free flow of oil through key shipping chokepoints. More than 20 million b/d of oil and products pass through the Persian Gulf and Red Sea regions, equal to over 30% of global seaborne exports.

Speaking during a July 23 webinar on UAE-Africa ties, Mohammed Baharoon, director general of Emirati public policy research center B’huth, said that "Africa is no longer just aid and security, it’s viewed as a market for resources."

Increasingly, UAE banks have also been expressing an interest in funding energy M&A on the continent, people close to the transactions told Commodity Insights, amid a financing gap prompted by the energy transition and above-ground risks.

And demonstrating the wider UAE’s commitment to African energy, on Aug. 8, the Emirate of Fujairah signed a petroleum cooperation deal with Egypt, according to a UAE government statement.

Insufficient financing and an IOC exodus have left legacy producers like Nigeria, Angola and Equatorial Guinea scrambling to reverse crude production declines and fearing energy insecurity.

"There’s clearly a lot of clamoring for resources just as Europe is pulling back to green transition amid climate change considerations. And you’re seeing a real vacuum across the African continent," said Farrand. "There’s clearly an opening for the Gulf."

"In short, this is another version of Emirati [economic] diversification," said Bohl. "From food to critical minerals to logistics, the UAE wants to be a key player in Africa, particularly as China starts to pare back some of its investments."

Corrects story published Aug. 13 to make clear that many of ADNOC's holdings in Africa are indirect, and amends sourcing.