ADNOC awards framework agreements worth $1.94bn to boost drilling

Abu Dhabi National Oil Company (ADNOC) announced today that it has awarded framework agreement awards valued at $1.94bn (Dhs7.1bn) to enable drilling growth. The awards build on ADNOC’s recent investments in drilling-related equipment and services while supporting its strategy to bolster crude oil production capacity to 5 million barrels per day by 2030 and drive gas self-sufficiency for the UAE

The framework agreements for wireline logging and perforation services are the largest of such awards in the oil and gas industry and were awarded to ADNOC Drilling, Schlumberger, Haliburton and Weatherford, following a competitive tender process.

Wireline logging involves continuously measuring the properties of rock formations to guide drilling operations while perforation creates tunnels in the wellbore to allow fluid to flow in from the reservoir.

Dr Sultan Ahmed Al Jaber, Minister of Industry and Advanced Technology and ADNOC MD and group CEO, said: “The framework agreements announced today are a continuation of ADNOC’s unprecedented investment in services to enable the expansion of drilling activity required to responsibly unlock the UAE’s leading low-cost and low-carbon intensity oil as well as the nation’s gas resources. Not only do these awards support our 2030 strategy, they are expected to deliver over 80 per cent of In-Country Value to the UAE and align with the UAE’s ‘Principles of the 50’ economic blueprint for sustainable growth.”

The framework agreement awards cover ADNOC’s onshore and offshore fields and will run for five years with an option for a further two years. Furthermore, skilled employment opportunities will be created for UAE Nationals by the successful companies who will also work to identify local manufacturing opportunities.

We’ve awarded fresh framework agreements worth nearly $2 billion towards enabling drilling growth for the UAE.
#EnergyForLife pic.twitter.com/3v5mVT8qbD

— ADNOC Group (@AdnocGroup) February 17, 2022

ADNOC Drilling’s share of the awards is the largest and it covers services including cased hole and open hole as well as perforation. This reflects the company’s expanded service profile as a result of its transformation into a fully integrated drilling services company following the award to Baker Hughes of a 5 per cent share in the company in 2018.

The company also recently announced its financial results for the fourth quarter (Q4) and full year ending December 31, 2021. Its revenue for the 12-month period increased 8.2 per cent to $2.27bn compared to the same period last year.

Read: ADNOC Drilling announces net profit of $604m for 2021

Yaser Saeed Almazrouei, ADNOC Upstream executive director, said: “The award to ADNOC Drilling demonstrates its robust offering and capabilities as well as its integral role in ADNOC’s future drilling activities.”

He added that the awards to all four companies will “deliver sustantial in-country value, and create new job opportunities for UAE Nationals, in line with the leadership’s wise directives”.

The framework agreement awards will support ADNOC’s requirement to drill thousands of new wells to expand its production capacity and remain a leading low-cost, low-carbon oil producer. The awards will also enable hundreds of millions of dollars in cost savings.

As an integral part of its 2030 strategy, ADNOC is optimising its procurement strategy to reflect market dynamics, focusing on long-term contracts with an optimised number of suppliers that provide stable and reliable delivery at highly competitive rates. In November 2021, ADNOC announced investments of almost $6bn (Dhs22bn) in the form of procurement awards to top-tier contractors for wellheads and related components, downhole completion equipment and related services, and liner hangers and cementing accessories.