Adnoc awards $946m contract to NPCC for Umm Shaif oilfield development

More than 75% of the award value will flow back into the UAE’s economy through the energy company's In-Country Value programme

The Umm Shaif offshore oilfield is Adnoc's most historic offshore asset. Photo: Adnoc

State-owned Adnoc awarded a Dh3.47 billion ($946 million) contract to Abu Dhabi's National Petroleum Construction Company (NPCC) to develop its offshore Umm Shaif oilfield, a move that backs the company's plans to boost production by 2030.

Adnoc Offshore awarded the contract, which covers the engineering, procurement, fabrication, installation and commissioning activities required to maintain Umm Shaif’s crude production capacity of 275,000 barrels per day, improve efficiencies and enhance the field’s long-term potential, Adnoc said on Wednesday.

“This important award for the long-term development of Adnoc's pioneer offshore Umm Shaif field will maximise efficiencies while maintaining future output and supporting Adnoc's strategic objective of 5 million barrels of oil production capacity a day by 2030," Adnoc Upstream's executive director Yaser Almazrouei said.

"The development plan for Umm Shaif underpins Adnoc’s commitment to maintain its position as a leading low-cost oil producer and strengthens our role as a reliable energy provider to customers around the world."

The state oil producer plans to significantly increase its investment in hydrocarbons. It has awarded a number of contracts to different companies to increase its output capacity to 5 million barrels per day by 2030.

Last month, Adnoc’s board approved plans to spend Dh466bn between 2022 and 2026 to expand its upstream production capacity and downstream portfolio, as well as its low-carbon fuels business and clean energy ambitions.

Umm Shaif is Adnoc's most historic offshore asset. The UAE’s first exported oil from the field 60 years ago in July 1962.

More than 75 per cent of the total contract value will flow back into the UAE economy under Adnoc's In-Country Value (ICV) programme, ensuring that more economic value remains in the country from the contracts it awards, the company said.

The engineering, procurement and construction contract, which is due to be completed in 2025, includes two packages for network expansion and new wellhead towers.

The first package includes modifications and extension of existing structures and the installation of new sub-sea cables and pipelines for de-bottlenecking.

The second package includes the design of three lean wellhead towers with associated new pipelines.

The contract incorporates technology termed as "fit for the future", which includes rig-less electrical submersible pumps and other digital field technology that will boost efficiencies while maintaining current production capacity, Adnoc said.

“This contract is an important contributor to Adnoc Offshore’s plans as we build our production capacity to over 2 million barrels a day in the coming years in support of Adnoc's smart growth strategy," said Ahmad Al Suwaidi, chief executive of Adnoc Offshore.

"The award follows a highly competitive bid process, which included a rigorous assessment of how much of the contract value would support the growth and diversification of the UAE’s economy through Adnoc's ICV Programme.”

The UAE’s efforts to encourage locally made products are part of wider plans to achieve self-sufficiency in the production of basic goods and increase the private sector's contribution to manufacturing.

In 2018, Adnoc introduced a procurement-led ICV programme to encourage Emiratisation, economic diversification and strategic considerations.

The programme was aimed at localising strategic supply chains and increasing the private sector’s contribution to socio-economic development.

As of December 2019, the Adnoc ICV programme has driven more than Dh44bn back into the UAE’s economy and put more than 1,500 Emiratis in the private sector.