Adnoc to invest $6 billion to enable drilling growth

The Abu Dhabi National Oil Company (Adnoc) on Tuesday announced record investments worth up to almost $6 billion (Dh22 billion) to enable drilling growth as it boosts its crude oil production capacity to 5 million barrels per day (mmbpd) by 2030 and drives gas self-sufficiency for the UAE.

Making the announcement on the second day of the Abu Dhabi International Petroleum Exhibition and Conference (Adipec), Dr Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology, and Adnoc Managing Director and Group CEO, said: “Adnoc’s world record investments in drilling-related equipment underlines our commitment to responsibly unlocking our world-scale hydrocarbon resources and expanding our production capacity to continue providing the world with some of the least carbon-intensive barrels for decades to come.”

The investments are in the form of procurement awards to top-tier contractors for wellheads and related components, downhole completion equipment (DCE) and related services, and liner hangers and cementing accessories — all crucial in drilling for oil and gas and completing wells.

“The awards were secured at highly competitive rates, enabling substantial cost savings for Adnoc and underpinning our broader efforts to drive commerciality and value across our entire portfolio.”

More than $900 million (Dh3.3 billion) worth of wellheads and over $700 million (Dh2.6 billion) worth of downhole completion equipment will be manufactured in the UAE as well as all liner hangers. In addition, $185 million (Dh679 million) in foreign direct investment (FDI) will flow into the UAE’s economy to establish two wellheads manufacturing and assembly facilities, enhance drilling-related equipment manufacturing and assembly, and enable local manufacturing of 20 new drilling completion products thereby strengthening the UAE’s drilling supply chain with vendor managed inventory.

Almost 60 per cent of the total value of the awards could flow back into the UAE’s economy under ADNOC’s successful in-country value (ICV) programme over the duration of the awards.

“Crucially, the awards will directly create more skilled employment opportunities for UAE Nationals, enhance domestic manufacturing and further stimulate the growth of the private sector and our local industrial base. This is yet another example of how Adnoc is working to support the growth and diversification of the UAE’s economy, in line with the Principles of the 50 and the Leadership’s wise directives.”

The huge ICV resulting from this mega award package directly supports the objectives of the UAE’s Principles of the 50 to develop human capital and accelerate the development of a dynamic economy.

The procurement award for wellheads and related components is worth up to $3.27 billion (Dh12 billion), making it the world’s largest in this category. Gulf Automation Services and Oilfield Supplies (GASOS), UAE agents for TechnipFMC, and Al Ghaith Oilfield Supplies and Services Company, UAE agents for Baker Hughes, secured the awards with both companies having an equal split of the scope which runs for 10 years.

The procurement award for downhole completion equipment and related services is worth up to $2.34 billion (Dh8.6 billion), also making it the world’s largest in this category. Schlumberger Middle East (Schlumberger) and Weatherford Bin Hamoodah Company (Weatherford) secured the awards. Schlumberger’s scope is valued at up to $1.41 billion (Dh5.18 billion) while Weatherford’s scope is valued at up to $931 million (Dh3.42 billion). The award runs for five years with an option to extend for two years.

The procurement award for liner hangers and cementing accessories is worth up to $337 million (Dh1.24 billion) and runs for five years with an option to extend for two years.

The award for liner hangers was made to Weatherford Bin Hamoodah, UAE agents for Weatherford and Uni-Arab Engineering and Oilfield Service, UAE agents for Baker Hughes, while the award for Cementing Accessories was made to Al Ghaith Oilfield Supplies and Services Company, UAE agents for Downhole Products, Best Pick General Trading, UAE agents for NeOz Energy, and Al Mansoori Specialized Engineering, UAE agents for Sledgehammer.

— ashwani@khaleejtimes.com