Abu Dhabi’s ADNOC announces $6bn investments to foster drilling growth

State-owned Abu Dhabi National Oil Company (ADNOC) has announced investments of almost $6bn (Dhs22bn) to enable drilling growth as it aims to boost its crude oil production capacity to five million barrels per day by 2030.

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 – all crucial in drilling for oil and gas and completing wells, a statement said. The scope of the awards will provide ADNOC with a robust supply chain of drilling-related equipment to drill thousands of new wells as it expands its production capacity.

Almost 60 per cent of the total value of the awards could flow back into the UAE’s economy under ADNOC’s In-Country Value (ICV) programme over their duration. Additionally, more than $900m (Dhs3.3bn) worth of wellheads and over $700m (Dhs2.6bn) worth of downhole completion equipment will be manufactured locally as well as all liner hangers.

In addition, $185m (Dhs679m) in foreign direct investment (FDI) will flow into the UAE’s economy to establish two wellheads manufacturing and assembly facilities, enhance drilling-related equipment manufacturing and assembly, and enable local manufacturing of 20 new drilling completion products.

The announcement was made at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) and follows the listing of ADNOC Drilling on the Abu Dhabi Securities Exchange (ADX) last month.

Read: ADNOC Drilling lists IPO on Abu Dhabi Securities Exchange

We’re announcing record-breaking investments of up to $6 billion to support our plans to drill thousands of new wells, as we boost crude production capacity to 5 million barrels per day by 2030 and drive gas self-sufficiency for the UAE. #EnergyForLife #ADIPEC

— ADNOC Group (@AdnocGroup) November 16, 2021

Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology, and ADNOC managing director and group CEO, said: “ADNOC’s world record investments in drilling-related equipment underlines our commitment to responsibly unlocking our hydrocarbon resources and expanding our production capacity to continue providing the world with some of the least carbon-intensive barrels for decades to come.

“Crucially, the awards will directly create more skilled employment opportunities for UAE Nationals, enhance domestic manufacturing and further stimulate the growth of the private sector and our local industrial base.”

The procurement award for wellheads and related components, worth up to $3.27bn (Dhs12bn) was secured by Gulf Automation Services & Oilfield Supplies – UAE agents for TechnipFMC, and Al Ghaith Oilfield Supplies & Services Company – UAE agents for Baker Hughes, with both companies splitting the scope that runs for 10 years, the statement added.

Meanwhile, the procurement award for downhole completion equipment and related services valued up to $2.34bn (Dhs8.6bn). Schlumberger Middle East and Weatherford Bin Hamoodah Company secured the awards with the former’s scope valued at up to $1.41bn (Dhs5.18bn) and the latter’s at up to $931m (Dhs3.42bn). The award runs for five years with an option to extend for two years.

The award for liner hangers was made to Weatherford Bin Hamoodah 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 procurement award for liner hangers and cementing accessories equals up to $337m (Dhs1.24bn) and runs for five years with an option to extend for two years.