Abu Dhabi: The Abu Dhabi National Oil Company (ADNOC) announced on Wednesday the awarding of multi-billion-dollar contracts for the procurement of casing and tubing as it drives value through its smart approach to procurement.
The combined scope of the three contracts awarded is one of the world’s largest in this category, maximising value for ADNOC across its drilling value chain and underpinning its strategy to deliver a more profitable upstream business.
The contracts – which were awarded to Consolidated Suppliers Establishment, representing Tenaris S.A. (from Luxembourg); Abu Dhabi Oilfield Services Company, representing Vallourec S.A. (from France); and Habshan Trading Company, representing Marubeni Corporation (from Japan) – have a combined scope of Dh13.2 billion ($3.6 billion) and the potential to achieve In-Country Value of over 50 per cent. This includes more than Dh367 million ($100 million) in foreign direct investment, over the next five years, to establish a state-of-the-art oil country tubular goods (OCTG) threading plant and repair centre, and a training academy in Abu Dhabi to enhance local expertise and generate value for the UAE.
Under the terms of the contracts, the three companies will supply a combined total of 1 million metric tons of casing and tubing – which by comparison is equivalent to the distance from Abu Dhabi to Houston – over 5 years, to support ADNOC’s drilling activities.
The award marks the first in a series of drilling-related procurement expenditures with an overall value of Dh55 billion ($15 billion) that ADNOC plans to make in the next five years and is part of its Dh486 billion five-year capital expenditure (CAPEX) approved by Abu Dhabi’s Supreme Petroleum Council (SPC) in November 2018. The other procurement categories – excluding this award – are Downhole Completion Equipment, Wellheads, and X-Mas Trees, Liner Hangers, Drilling Fluids, Directional Drilling, Cementing, and Wireline Logging.
“The award of contracts with a combined scope that is one of the world’s largest for tubing and casing follows a highly competitive bid process. It underscores ADNOC’s optimisation efforts to drive commerciality across our growing portfolio,” said Abdulmunim Saif Al Kindy, ADNOC Upstream executive director
“These agreements will provide ADNOC with increased flexibility to proactively respond to the demands of the evolving energy landscape as we ramp up our drilling activities and deliver our 2030 strategy,” he added.
“They will also generate substantial In-Country Value and provide attractive foreign direct investment opportunities for the private sector, further demonstrating ADNOC’s commitment to creating sustainable value for the nation and its people, in line with the Leadership’s wise directives,” Al Kindy said, highlighting the economic benefits of the new deals.
With more than Dh6.6 billion ($1.8 billion) value potential to flow back into the UAE’s economy, the awards will give significant stimulus to the country’s products and services and create additional skilled employment opportunities for UAE nationals.
The combined scope of the awards is based on the forecasted requirement for casing and tubing across the ADNOC Group. The awards complement ADNOC’s substantial upstream growth plans and drive to deliver integrated drilling services as it plans to increase its conventional drilling by 40 per cent by 2025 and substantially ramp up the number of its unconventional wells. This is part of its target to achieve 4 million barrels of oil production capacity per day by the end of 2020 and 5 million bpd by 2030.