Adnoc awards $1.94bn in framework agreements to drive drilling growth

The pacts for wireline logging and perforation services are the largest of their kind in the oil and gas industry

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State-controlled oil and gas producer Adnoc awarded framework agreements valued at Dh7.1 billion ($1.94bn) to support drilling growth.

The pacts for wireline logging and perforation services are the largest of their kind in the oil and gas industry and were awarded to Adnoc Drilling, Schlumberger Middle East, Haliburton Worldwide Limited Abu Dhabi and Weatherford Bin Hamoodah Company after a “competitive” tender process, the company said on Thursday.

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.

“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,” said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc.

“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 awards build on Adnoc's recent record investments in drilling-related equipment and services and supports gas self-sufficiency for the UAE.

In November, Adnoc said it was investing $6bn in drilling growth amid a push to boost its crude oil production capacity to 5 million barrels per day by 2030.

The investment is 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, which are crucial in drilling for oil and gas and completing wells.

The new framework agreement awards cover Adnoc's onshore and offshore fields and will run for five years with an option to extend for a further two years, the company said.

Skilled employment opportunities will be created for UAE citizens by the successful companies, which will also work to identify local manufacturing opportunities, it said.

Adnoc Drilling’s share of the awards is the largest, reflecting its expanded service profile as a result of its transformation into a fully integrated drilling services company after the award to US energy services company Baker Hughes of a 5 per cent share in the company in 2018, Adnoc said.

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

“The awards to all four companies will deliver substantial in-country value and create new job opportunities for UAE nationals.”

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, it said.

They will also result in hundreds of millions of dollars in cost savings, the company said.

Adnoc Drilling's 2021 net profit increased 6 per cent to $604 million on the back of higher revenue as the company continues to support Adnoc’s efforts to grow its production capacity.

The, company which is the largest national drilling company in the Middle East by rig fleet size, attributed the rise in revenue to $2.27bn, from $2.09bn in 2020, to additional drilling services provided to Adnoc and its subsidiaries Adnoc Onshore and Adnoc Offshore.

Adnoc Drilling raised more than $1.1bn in September from its initial public offering on the Abu Dhabi Securities Exchange, which was oversubscribed more than 31 times.

Adnoc remains Adnoc Drilling's majority shareholder, with an 84 per cent stake. Baker Hughes holds 5 per cent while US contract oil and gas driller Helmerich & Payne holds a 1 per cent stake.

In December, Adnoc Drilling signed a deal with Helmerich & Payne to improve the Abu Dhabi company’s land rig operational performance.

It also agreed on a five-year, $3.8bn contract in December with Adnoc Onshore for the continued provision of drilling, workovers and other well services that will drive work crew efficiency and improve rig move times and maintenance scheduling.

Updated: March 06, 2022, 9:23 AM