Adnoc awards $3.5 billion contracts to Samsung Engineering

dubai - The signing of the agreements coincided with the UAE visit of President of the Republic of Korea

The Abu Dhabi National Oil Company (Adnoc) announced on Monday the signing of 2 contracts between Adnoc Refining, its wholly owned subsidiary, and Samsung Engineering Co. worth a total value in excess of $3.5 billion.

The signing of the agreements coincided with the UAE visit of Moon Jae-in, President of the Republic of Korea.

The two contracts include the award of a $3.1 billion project to introduce crude oil processing flexibility and the award of a $473 million project to recover power and water, both at the Adnoc-owned Ruwais oil refinery, the UAE's largest with a capacity of over 800,000 barrels per day.

The new contracts mark another significant step forward as Adnoc accelerates the delivery of its downstream strategy.

The latest deals are among a spate of contracts, including billions worth of concession agreements the oil giant has concluded this month with oil majors from around the world.

Abdulaziz Alhajri, Adnoc's downstream director, and Choi Sung-An, CEO of Samsung Engineering, signed the deals in the presence of Dr Sultan Ahmed Al Jaber, UAE Minister of State and Adnoc Group CEO, and Paik Ungyu, Minister of Trade, Industry and Energy, Republic of Korea.

"Adnoc has a long and successful history of working with Korean companies as partners in our concession areas, as contractors for our major projects and as a customer of our crude oil and refined products. The award of two major Engineering, Procurement and Construction [EPC] contracts reinforces the strong business relationship that exists between the UAE and Korea," said Dr Al Jaber.

"As Adnoc continues to deliver on its 2030 smart growth strategy, a number of new and exciting opportunities exist across our value chain, particularly in the downstream, which offer the potential to deepen and develop the longstanding relationship between Adnoc and its Korean counterparts,"  he said.

The EPC contract for a crude oil processing flexibility project, scheduled to be completed by the end of 2022, will enable Adnoc's Ruwais Refinery-West complex to process up to 420,000 bpd of Upper Zakum crude, or similar crude types from the market, allowing the oil major to extract greater value from its crude resources by liberating Murban crude, which commands a higher price on global oil markets, to be utilised for export sales, the company said.

The second contract, an EPC contract for a new waste heat recovery project, is scheduled for completion by the end of 2023. It will generate an additional 230MW of electricity for sale and 62,400 m3 water daily by capturing waste heat, which is currently vented into the atmosphere, by upgrading 4 giant gas turbines with closed-cycle power generation technology. The project will play a significant role in reducing the environmental impact of Adnoc's refining and power operations, while improving energy efficiency.

The company said in line with the standard selection criteria for all EPC contracts, Adnoc Refining carefully reviewed the In-Country Value (ICV) component of all bids submitted for both the awarded contracts. ICV was a critical consideration in the tender evaluation and contractor selection process.

The Abu Dhabi oil giant is making significant investments in new downstream projects to grow its refining capability and expand its petrochemical production three-fold to 14.4 mpta by 2025. Planned projects include a world scale, mixed liquid feedstock Naphtha cracker, as well as investments in new refinery capacity. As a result of the planned expansions in its downstream business, Adnoc will create one of the world's largest integrated refining and petrochemical complexes at Ruwais, located in Abu Dhabi's Al Dhafra region.

- issacjohn@khaleejtimes.com