ADNOC Outlines $6 Billion Spending Plan for Growth Through the Drill Bit
The fresh investment will result in the manufacture of new drilling-related equipment to assist the national oil company in boosting production capacity.
The Abu Dhabi National Oil Company (ADNOC) revealed plans this week for record investments worth almost $6 billion to enable drilling growth as it looks to boost its crude oil production capacity to 5 million B/D by 2030. The company unveiled the new spending plan at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) and follows the recent listing of ADNOC Drilling on the Abu Dhabi Securities Exchange.
The investments are in the form of procurement awards to 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 program.
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. $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 completion products. ADNOC said the investment will strengthen the UAE’s drilling supply chain with vendor-managed inventory.
“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,” said His Excellency Dr. Sultan Ahmed Al Jaber, UAE minister of industry and advanced technology, and ADNOC managing director and group chief executive. “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.”
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 and Oilfield Supplies, UAE agents for TechnipFMC, and Al Ghaith Oilfield Supplies and 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. Schlumberger Middle East and Weatherford Bin Hamoodah Company 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 5 years with an option to extend for 2 years.
The procurement award for liner hangers and cementing accessories is worth up to $337 million and runs for 5 years with an option to extend for 2 years.
The award for liner hangers was made to Weatherford Bin Hamoodah, UAE agents for Weatherford, and Uni-Arab Engineering and Oilfield Service, UAE agents for Baker Hughes. The award for cementing accessories was made to Al Ghaith Oilfield Supplies and 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 the oil company with a supply chain of drilling-related equipment to enable its requirement to drill thousands of new wells.
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 competitive rates.