A rapidly evolving energy business
Chris Wood, CEO of RAK Gas, talks to The Energy Year about the key factors driving energy markets, the central role the company plays in the UAE’s Ras Al Khaimah and its plans for expansion. 100% owned by the Ras Al Khaimah government, RAK Gas engages in domestic and international exploration and production.
What factors do you see as driving energy markets currently?
Although the energy transition is underway, current geopolitical dynamics are leading to a pushback, necessitating a rebalancing of commodity supply chains, energy and minerals essential for the transition. We expect that hydrocarbons will still play a strong role if we want to manage a sustainable transition, and we will most likely hear that in the debates during COP28.
There is a growing understanding that there are different ways to energise communities and that we can learn from early adopters such as Europe. As we see with all past efforts with energy supplies, we continue to face similar sustainability, economic and security challenges across the world.
RAK Gas advocates for diversified energy supply chains and continued investment in the upstream oil and gas sector supporting an orderly and sustainable energy transition. Additionally, for the sake of the prosperity and sustainability of many communities across Africa, the Middle East and Asia, there is a need for different approaches to achieve affordable and safe access to energy sources.
Gas serves as a good cleaner transitional energy source whilst we develop technology and infrastructure for affordable sustainable fuels to support all markets and communities, not just those that can afford them.
Tell us about the role RAK Gas plays in Ras Al Khaimah.
RAK Gas is the primary hydrocarbons business in Ras Al Khaimah, engaged in E&P as well as midstream and downstream activities to support its economy and growing industrial ecosystem.
RAK Gas Commission (RGC) was founded in 1984 to support the development and distribution of Ras Al Khaimah’s domestic hydrocarbons resources. In 2007, RGC became RAK Gas LLC and began expanding its upstream activities domestically and in Africa.
We are now in a new development phase, with active exploration activities in four domestic blocks. Two of these blocks are being developed in partnership with Eni (Block A and Block 7), while PKN Orlen S.A. is active in Block 5. Block 6 is currently awaiting seismic data processing and is expected to be marketed in 2024. With no current gas production due to the Atlantis Field’s closure in January 2022, our gas processing facilities are currently mothballed, and we continue to manage the balance of our gas distribution as well as offshore field maintenance and monitoring.
Whilst waiting on exploration success, we have diversified our gas sources using existing infrastructure to transport gas from Abu Dhabi, Qatar and Oman. There is an extensive network of pipelines and processing facilities owned by third parties from which we can source gas and then use our own infrastructure to distribute it within Ras Al Khaimah.
Since I joined RAK Gas in April 2022, we have focused on business growth, with an increase in gas sourcing from around 42 million Btu per day to over 100 million Btu per day. I see energy demand growing significantly due to increased commercial investment in Ras Al Khaimah. New infrastructure is required to support this level of growth. RAK Gas’ teams are working on a number of infrastructure projects to revamp ageing assets, expand for growth and meet challenges for new sustainable energy projects. One of these new infrastructure projects includes constructing 150 kilometres of new pipelines. Upon completion, these pipelines will connect us to existing and new regional pipelines, potentially tripling our current capacity and satisfying our anticipated future growth needs.
We are at a strategic turning point within the company, with a growing customer base seeking energy security and desiring new sustainable energy solutions and products. At RAK Gas, we are expanding our energy portfolio, and our team is addressing these challenges to provide real solutions.
What avenues of expansion are you currently developing?
Historically RAK Gas focused on the gas-related business, processing offshore gas streams. We produced natural gas, LPG, pentane and condensate from these fields. With their decline, we increasingly relied on gas from our neighbours. I joined RAK Gas to expand the business towards a more sustainable and diverse energy portfolio. Initially, I focused on organically growing the gas business with existing infrastructure. We are observing growth from customer expansion and new entrants to Ras Al Khaimah.
Additionally, we are collaborating with the cement industry to transition to cleaner gas, which is expected to reduce CO2 emissions by around 2 million tonnes per annum. The success has prompted the need to evaluate new infrastructure to support this growth due to an apparent mismatch between supply and demand.
As mentioned earlier, we are considering an infrastructure investment of around USD 200 million. However, success in our exploration activities would necessitate redeveloping our gas processing facilities and upstream infrastructure, potentially escalating the investment to over USD 1 billion. As for the pipeline we are building, we have set ourselves a challenging timeframe. We are finishing the pre-FEED stage with an aim of beginning construction next year and are planning to commission in 2025.
The strategy we are pursuing has four pillars. The first two concern the upstream and downstream gas business, and the third revolves around fuels for industry. In January 2023, we entered the fuels value chain, initially focusing on diesel distribution. We plan to expand this business into a broader fuels business serving UAE industrial customers and ensuring improved service and safety whilst remaining competitive. Finally, in the fourth pillar, we aim to support customers with gas-to-power projects.
Can you comment on your strategy for becoming an international oil and gas player?
Our core business is centred on evolving into a diversified energy business in Ras Al Khaimah. In addition to our local endeavours, our international business extends its reach to East Africa, with a focus on our interests in Tanzania, Zanzibar and Somaliland. Our objectives remain the same: energising communities and unlocking their natural resources to support economic and social development.
In Zanzibar, as the block operator, we are in dialogue with authorities to develop a credible path forward. In Tanzania, where we hold a 25% interest [in the Nyuni PSA], we are awaiting the completion of 3D-seismic data to see how to go forward with the field. Regarding Somaliland, as the operator of the block, our planning phase for our drilling campaign is underway and is a topic of ongoing discussion with the minister of energy.
This renewed emphasis on our international assets sets the stage for realising substantial value and generating investable projects for both RAK Gas and potential investors. Despite these emerging activities being in the initial phases, their potential is immense. Our operations are being meticulously structured to optimise our capabilities, and we are committed to maximising the value extracted from these fields in the future.
What are your plans for rebuilding your position in the UAE’s upstream sector?
We have been very active this year in our domestic upstream business – drilling two exploration wells, our first since 1984 – and are in the planning stages for more next year. Together with Eni we are continuing drilling operations at our offshore Block A, with a target depth of around 6,500 metres – making it one of the deepest operations in the UAE. The technical challenges are immense, but our established partnership with Eni has already proven successful in the past. Furthermore, we have active drilling operations on Block 5 with PKN Orlen S.A. and are collaborating with Eni on Block 7, where we expect to commence drilling next year.
Working alongside Poland’s Geofizyka Toruń (GT), we completed Block 6’s seismic data acquisition in Q1. The preliminary data looks promising, and we look forward to engaging prospective partners to license the block in 2024. We are confidently positioned with a robust pipeline of opportunities in the upstream hydrocarbons segment.
RAK has been blessed with an ophiolite rock structure, predominantly in RAK South (the Wadi Shawka area), which holds the potential to produce and trap naturally occurring hydrogen and enable carbon capture and storage via mineralisation. Collaborating with several advisers, including Energex Partners and RISC, we seek to understand this potential further and develop a structured framework to explore and potentially realise this opportunity.
This initiative is a fantastic opportunity for RAK Gas to contribute towards energising our communities with sustainable energy solutions, aligning with the UAE’s climate targets.
What parameters do you believe will make RAK Gas successful?
We are a rapidly evolving business with an array of projects coming up and a crystalline vision for the future. At this pivotal juncture, we are working on all aspects of the business, especially enhancing our organisational capabilities. Our staff and partners are central to realising our ambitions, highlighting the importance of listening to and incorporating their valuable insights into our strategic planning. These are exhilarating times, and we are confident about realising our growth ambitions, mainly thanks to the support of our teams.
Community is at the heart of what we do. It is essential in building a diverse organisation and a meaningful part of our commitment to Emiratisation. In every area where we operate, local community development is integrated into our strategy. This approach provides opportunities and sustained growth for surrounding populations, underscoring our dedication to not just business expansion but also societal enrichment.
Finally, we are firmly committed to the energy transition. Every business line has an energy transition plan, from our Industrial Fuels line with its biofuels strategy through to our Upstream Hydrogen and Carbon Capture line via mineralisation projects.
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