AI Boom to Fuel Long-Term Surge in LNG Demand, Adnoc Gas CEO Predicts Amid Shipping Disruptions

The global demand for natural gas is set for sustained long-term growth, driven by the increasing energy needs for artificial intelligence development, according to the chief executive of Adnoc Gas. This projection comes even as shipping in the Strait of Hormuz faces severe disruptions, impacting approximately one-fifth of the world's monthly liquefied natural gas (LNG) supply since the Middle East conflict began in February, as noted in Shell's latest LNG outlook, which highlighted adverse effects on some Asian countries.

Fatema Al Nuaimi, speaking at Adipec on Tuesday, affirmed, “Gas is going to continue to grow and demand is going to continue in the long-term.” This statement follows news of Adnoc's XRG potentially acquiring an Australian LNG stake for $1.5 billion.

The conflict has also affected major LNG infrastructure, with Ras Laffan in Qatar, the world's largest LNG refinery, reportedly sustaining severe damage from Iranian missile attacks. Consequently, QatarEnergy has declared long-term force majeure on contracts with buyers in China, South Korea, Italy, and Belgium.

Despite these challenges, Shell's report projects a significant increase in global LNG demand, estimating a rise of around 65 percent by 2050, reaching nearly 700 million tonnes annually. A primary catalyst for this growth is the expanding development of new data centers required to power AI technology.

“We have these new demand hubs from AI … about 9.5 million tonnes of LNG required just for SpaceX,” Ms. Al Nuaimi stated. She further elaborated, “We are an ambitious nation when it comes to building AI hubs to attract the biggest names in artificial intelligence and for this to be materialised, energy is required.”

Abu Dhabi is actively investing in AI infrastructure to foster the technology's growth. Notable projects include the 1-gigawatt Stargate UAE project, a collaboration between Abu Dhabi-based AI company G42 and technology leaders OpenAI, Oracle, and Nvidia. This facility will be part of the larger 5GW UAE-US AI Campus in Abu Dhabi.

Ms. Al Nuaimi also emphasized the need for greater flexibility and cooperation in managing gas contracts to navigate evolving market conditions. “Contracts are very rigid, written with terms and conditions, and no matter how you craft them, they are not fit for different circumstances that face us in the market. So it's important for us to be flexible and to work together eventually,” she remarked.

In line with its market expansion, Adnoc Gas announced on Tuesday a five-year agreement to supply up to 1.6 million tonnes of LNG to France's TotalEnergies. This deal is part of Adnoc's strategy to scale up a new global LNG trading platform, integrating the marketing activities of Adnoc Gas and its investment arm XRG with the commercial expertise of Adnoc Trading. Adnoc Gas currently supplies approximately 60 percent of the UAE's domestic sales gas needs and serves end customers in over 20 countries.