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ADNOC announces nearly $6 billion in contract awards for drilling equipment, services

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The Abu Dhabi National Oil Company (ADNOC) announced record investments worth up to almost $6 billion to enable drilling growth as it boosts its crude oil production capacity to 5 million bbl/day by 2030 and drives gas self-sufficiency for the United Arab Emirates (UAE). The announcement was made at ADIPEC and follows the recent successful listing of ADNOC Drilling on the Abu Dhabi Securities Exchange.

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.

Almost 60% of the total value of the awards could flow back into the UAE’s economy under ADNOC’s In-Country Value (ICV) program over the duration of the awards.

Further, 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. In addition, $185 million in foreign direct investment will flow into the UAE’s economy to establish two wellhead manufacturing and assembly facilities, enhance drilling-related equipment manufacturing and assembly, and enable local manufacturing of 20 new drilling and completion products, thereby strengthening 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.

“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,” said Dr Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology, and ADNOC Managing Director and Group CEO.

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, UAE agents for TechnipFMC, and Al Ghaith Oilfield Supplies & Services Company, UAE agents for Baker Hughes, secured the awards. Both companies have 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 and 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 procurement award for liner hangers and cementing accessories is worth up to $337 million 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 & Oilfield Service, UAE agents for Baker Hughes, while the award for cementing accessories was made to Al Ghaith Oilfield Supplies & 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.

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 low-cost oil producer status.

The awards are expected to enable hundreds of millions of dollars in cost 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.

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