UAE's Sharjah National Oil puts LNG project on hold to focus on gas discovery

Dubai — UAE's Sharjah National Oil Corp. (SNOC) is putting its LNG project with Uniper on hold to focus on its first onshore natural gas discovery in 37 years, along with exploration activities, its CEO said Tuesday.

The company announced the Mahani gas discovery in January, saying the drilled well achieved flow rates of up to 50 Mscf/d of lean gas and associated condensate. Italy's Eni is a 50% partner in the Area B Concession of Sharjah, where the discovery was made and further exploration activities continue.

"After the Mahani discovery and also with our exploration program with Eni, in addition to some other external factors we have deiced to put the LNG project on hold until we have a better understanding of the size of the Mahani discovery and prospect of having additional discoveries within Sharjah," Hatem al-Mosa said in a media roundtable.

SNOC had initially agreed with Uniper to set up a joint venture to import LNG for a 10-year period to feed into power stations and later industrial areas in the emirate of Sharjah, the UAE's third largest city. Imports were expected to reach 3-4 million tons/year.

On track

SNOC and Eni officials said they are on track to produce around 50 Mscf/d of gas in the H1 of next year, despite the outbreak of the coronavirus and the oil price crash.

"As far as Eni is concerned, there will be no impact on Mahani," Fuad Krekshi, executive vice president for Middle East, said in the roundtable.

Eni will review its 2020-2021 projects and weigh a "strong reduction" in capex and costs, CEO Claudio Descalzi announced on March 18. Eni had a previous capex guidance of around Eur8 billion/year. The Rome-based major is planning three oil and gas field start-ups this year along with seven FIDs, four of which are in the UAE.

Mosa said the project is unlikely to be affected by the coronavirus and oil price crash because it will be used for power generation locally.

"The gas is all dedicated to the market 100% and already committed and demand is there," he said.

"We don't actually see much of an impact on gas production in Sharjah as result of demand reduction in the world."