ADNOC Gas awards $550m contracts to expand UAE gas infrastructure

ADNOC Gas has announced the award of engineering, procurement, and construction (EPC) contracts for the next phase of the UAE sales gas pipeline network enhancement, known as the “ESTIDAMA Project.”

In a separate development, ownership of the ESTIDAMA project will be transferred from ADNOC Gas to ADNOC, significantly optimising ADNOC Gas’ capital efficiency.

The EPC contracts, worth a combined $550m(Dhs2bn), have been awarded to NMDC Energy  and Galfar Engineering & Contracting W.L.L Emirates, as per state news agency WAM.

Dr Ahmed Alebri, CEO, ADNOC Gas, stated, “This award supports the ongoing expansion of the UAE’s gas pipeline network, which will bring lower-cost and sustainable natural gas to more locations across the country. We are proud to play a leading role in meeting the growing demand for gas across the country and enabling the UAE’s goal of gas self-sufficiency.

“With the transfer of ownership of the ESTIDAMA Project to ADNOC, ADNOC Gas will continue to benefit from the expansion of the pipeline networks, while improving our capital efficiency to ensure that we maximise value for our shareholders.”

Impact

Approximately 70 per cent of the contract value is expected to benefit the UAE economy through ADNOC’s In-Country Value (ICV) programme, supporting local economic growth and diversification.

The ESTIDAMA project will extend ADNOC Gas’ natural gas pipeline network in the UAE from around 3,200 kilometres to over 3,500 kilometres. This extension will enable the transportation of higher volumes of natural gas to customers in the Northern Emirates.

The existing pipeline network enables delivery of sales gas to customers across Abu Dhabi, Dubai and the Northern Emirates, meeting over 60 per cent of UAE gas requirements, as per ADNOC data.

Following the ownership transfer, ADNOC Gas will continue to manage the ESTIDAMA project, leveraging its expertise in construction and pipeline operations, with ADNOC covering the capital expenditures for this critical infrastructure project.

ADNOC Gas will continue to expand its domestic business through the ESTIDAMA project, paying ADNOC a variable transmission fee for the actual throughput of the pipeline, added the report. ADNOC Gas will also be compensated for operating and maintaining ESTIDAMA on behalf of ADNOC.

Read: BlackRock, KKR sell ADNOC oil pipeline stake to Lunate