The Abu Dhabi National Oil Company (ADNOC) will make an investment of almost $6 billion to enable drilling growth as it attempts to boost its crude oil production capacity to 5 million barrels per day (mmbpd) by 2030 and drive gas self-sufficiency for the UAE.
The announcement was made during the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) and follows ADNOC Drilling’s successful initial public offering (IPO) on the Abu Dhabi Securities Exchange (ADX).
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.
Almost 60 percent of the total value of the awards could be reinvested in the UAE’s economy under ADNOC’s successful In-Country Value (ICV) program over the duration of the awards. Furthermore, more than $900 million worth of wellheads and over $700 million worth of DCE will be manufactured in the UAE as well as all liner hangers.
“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 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.”
In addition, $185 million in foreign direct investment (FDI) will flow into the UAE’s economy to establish two wellhead manufacturing and assembly facilities, and enable local manufacturing of 20 new drilling completion products, bolstering the UAE’s drilling supply chain with vendor managed inventory.
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, making it the world’s largest in this category. Gulf Automation Services & Oilfield Supplies (GASOS), UAE agents for TechnipFMC, and Al Ghaith Oilfield Supplies & 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 DCE and related services is worth up to $2.34 billion, also making it the world’s largest in this category. Schlumberger Middle East S.A (Schlumberger) and Weatherford Bin Hamoodah Company (Weatherford) secured the awards.
Schlumberger’s scope is valued at up to $1.41 billion while Weatherford’s scope is valued at up to $931 million. The award runs for five years with an option to extend for two years.
The scope of the awards cut across the ADNOC Group and will provide ADNOC with a robust supply chain of drilling-related equipment to enable its requirement to drill thousands of new wells as it expands its production capacity while maintaining its leading low-cost oil producer status.