ADNOC Invests Over $750 Million in Drilling-Related Services
ADNOC Invests Over $750 Million in Drilling-related Services to Support Production Capacity Growth
The Abu Dhabi National Oil Company (ADNOC) announced, an investment of $763.7 million (AED2.8 billion) in integrated rigless services across six of its artificial islands in the Upper Zakum and Satah Al Razboot (SARB) fields to support its production capacity expansion to 5 million barrels per day (mmbpd) by 2030.
The investment is in the form of three contracts awarded by ADNOC Offshore to Schlumberger, ADNOC Drilling, and Halliburton after a competitive tender process. Schlumberger’s share of the award is valued at $381.18 million (AED1.4 billion); ADNOC Drilling’s share is valued at $228.71 million (AED839.58 million), and Halliburton’s share is valued at $153.87 million (AED564.85 million).
Over 80% of the total award value will flow back into the United Arab Emirate’s (UAE) economy under ADNOC’s In-Country Value (ICV) program over the 5-year duration of the contracts, reinforcing ADNOC’s commitment to ensuring more economic value remains in the country from the contracts it awards.
Yaser Saeed Almazrouei, ADNOC Upstream Executive Director, said: “These important awards for integrated rigless services will drive efficiencies of drilling and related services, and optimize costs in our Offshore operations as we ramp up our drilling activities to increase our production capacity and enable gas self-sufficiency for the UAE. The contractors bring best-in-class expertise and technologies with a proven track record in the industry and ADNOC Drilling’s scope reflects its expanded service profile following its successful transformation into a fully integrated drilling services (IDS) company, enabling it to offer its clients start-to-finish well drilling and construction services. Importantly, the high In-Country Value generated from the awards will stimulate new business opportunities for the private sector and support the UAE’s post-Covid economic growth.”
The scope of the contracts includes coiled tubing services with thru-tubing downhole tools, stimulation services, including equipment and chemicals/fluid systems, surface well testing services, wireline, and production logging services and tools, saturation monitoring, and well integrity.
Previously, ADNOC Offshore’s rigless services were provided through several discrete service-specific contracts. Unifying the scope through integrated service contracts, underpins ADNOC’s smart approach to procurement and provides ADNOC Offshore with operational flexibility while enabling cost efficiencies and single point responsibility by the contractors.
Ahmad Saqer Al-Suwaidi, CEO of ADNOC Offshore, said: “These contracts are an important contributor to ADNOC Offshore’s plans to build our production capacity to over 2 million barrels a day in the coming years to support the ADNOC Group’s smart growth strategy. The award follows a highly competitive bid process, which included a rigorous assessment of how much of the contract value would support the growth and diversification of the UAE’s economy through ADNOC’s In-Country Value Program.”
The six artificial islands covered by the awards are Asseifiya, Ettouk, Al Ghallan, and Umm Al Anbar in the Upper Zakum field and Al Qatia and Bu Sikeen in the SARB field. Artificial islands provide significant cost and environmental benefits, particularly in shallow water, by enabling the use of lower-cost land-drilling rigs instead of higher-cost offshore jack-up drilling rigs. ADNOC has a proven record of developing artificial islands and drilling the Middle-East’s longest wells, as part of its continued commitment to protecting the UAE’s marine environment while enabling greater operational efficiencies and safety.
ADNOC Drilling’s transformation into a fully integrated drilling services provider followed the award to Baker Hughes of a 5% share in the company, which is now capable of delivering start-to-finish drilling and well-construction services onshore and offshore with proven efficiency gains. As of May 2021, ADNOC Drilling has delivered over 180 IDS wells since 2018, achieving an efficiency improvement of close to 50%, which resulted in over $210 million (AED767 million) savings.
As an integral part of its 2030 strategy, ADNOC is optimizing its procurement strategy to reflect market dynamics, focusing on long-term contracts with a reduced number of suppliers that provide stable and reliable delivery at highly competitive rates. This smart approach is enabling ADNOC to create more value, drive efficiencies, and ensure that strategic materials and components are available on time while achieving substantial efficiency gains as it increases overall procurement spend.