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Bullish Adnoc focuses on offshore

The national oil company has begun several large scale projects to return the Emirate to gas self-sufficiency

Abu Dhabi National Oil Company (Adnoc) is making progress in chasing the ambitious oil and gas production capacity targets it set last year, with several major offshore field development projects generating a flood of contracting activity.

Tendering is under way for the main engineering, procurement and construction (EPC) packages on the multi-billion-dollar development of two giant shallow-water sour gas fields—the flagship upstream project in a wide-ranging gas sector strategy designed to transform the emirate back from importer to exporter within 10 years. Meanwhile, designs are being prepared for the expansion of Abu Dhabi's largest offshore oil field and for the first phase of development at another.

Technical bids have been invited for the largest of the EPC packages: the joint development of the Ghasha and Hail sour gas fields, located in shallow water off Abu Dhabi's north-west coast. The package includes an estimated $4bn new onshore gas-processing plant at Manayif, near Ruwais. A second onshore contract for associated utilities and tie-ins is also out to bid, with proposals due in late August.

Two offshore packages—one covering gas compression platforms, drill centres and subsea pipelines, and the other comprising the offshore gas-processing plant—are expected to be put out to bid imminently. In February, the National Marine Dredging Company was awarded the $1.4bn EPC contract for the 10 new artificial islands that are at the core of the estimated $10bn project—a development strategy designed to minimise environmental damage and reduce drilling costs. Production of 1bn ft3/d is due on stream in 2024.

KBR and Bechtel were selected respectively as the project management consultant and front-end engineering and design (FEED) contractor back in 2017, but progress was galvanised by two developments in Q4 2018. First, Adnoc created the Ghasha ultra-sour gas concession, covering these and other fields in the north-west offshore, selling 40pc of the shares to Eni, OMV and Wintershall. Then, in November, the Supreme Petroleum Council (SPC) approved Adnoc's Integrated Gas Strategy, which calls for tens of billions of dollars to be spent over five years to return the emirate to gas self-sufficiency by the middle of the next decade.

Oil capacity targets

The SPC also approved Adnoc's plans for oil field expansion, in pursuit of new output capacity targets of 4mn bl/d by the end of next year and 5mn bl/d by 2030, from about 3.5mn bl/d at present. With oil prices remaining relatively low despite more than two and a half years of the collective Opec production cuts, in which Abu Dhabi participates, the urgency of the development drive is inevitably less than that for gas.

$4bn — onshore gas-processing plant at Manayif

Nonetheless, design work is beginning on some of the key projects. Tecnicas Reunidas landed the FEED contract for the estimated $8bn next phase of long-planned expansion at the super-giant Upper Zakum asset—the world's second largest offshore oil field—to take production from 750,000bl/d to 1mn bl/d by 2024. The expansion builds on the landmark UZ750 project, for which ExxonMobil was brought on board as the concession's main international shareholder in 2006. Costing in excess of $21bn, the scheme entailed the use of artificial islands for the first time and has lifted output by 50pc.

On a smaller scale, the companies selected to participate in a design competition for the first-phase development of the Belbazem oil field, operated by Adnoc-CNPC joint venture Al-Yasat Petroleum, were revealed in late July. National Petroleum Construction Company in partnership with Petrofac; TechnipFMC with China Offshore Oil Engineering Company; and McDermott will all carry out paid FEED studies, after which one will be chosen to proceed with the engineering, procurement, construction and installation contract. The estimated $1bn project aims at production of 45,000bl/d of oil and 30mn ft3/d of gas. The combined FEED/EPC approach, which Adnoc began deploying on major schemes last year, is designed to reduce both costs and timeframe.

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