Adipec 2021: Adnoc to invest $6bn in drilling as it boosts crude oil production capacity

More than $1.8bn worth of drilling-related equipment will be made in the UAE

An Adnoc drilling rig in action. Adnoc

Adnoc is investing $6 billion in drilling growth as it boosts 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, Adnoc said on Tuesday.

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

The contracts were awarded to different local and international companies. Gulf Automation Services & Oilfield Supplies, UAE agents for TechnipFMC, and Al Ghaith Oilfield Supplies & Services Company, UAE agents for Baker Hughes, secured $3.27bn worth of contracts related to the procurement of wellheads and related components for drilling operations.

Schlumberger Middle East and Weatherford Bin Hamoodah company won another contract for downhole completion equipment and related services. The value of the deal is $2.34bn and the award runs for five years, with an option to extend for two years.

“The scope of the awards cut across the Adnoc group and will provide Adnoc with a robust supply chain of drilling-related equipment to enable its requirement to drill thousands of new wells as it expands its production capacity while maintaining its leading low-cost oil producer status,” the company said.

About 60 per cent of the total value of the awards could flow back into the UAE economy under Adnoc’s In-Country Value programme over the duration of the awards.

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  Adnoc Drilling is one of the largest drilling companies in the Middle East. Photo: Adnoc

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  An Adnoc Drilling rig. The company began operations in 1972 and currently operates 107 onshore, offshore and island rigs, of which 11 are rented. Photo: Adnoc

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  An old drill head at Adnoc's headquarters in Abu Dhabi. Khushnum Bhandari / The National

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  Adnoc Drilling has expanded its fleet of rigs, adding 67 since 2010, in line with the growth in oil and gas production capacity at its parent company. Khushnum Bhandari / The National

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  An Adnoc drilling rig. The company has achieved $2 billion in savings over the past five years through the use of technology. Photo: Adnoc

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  Drilling equipment on an artificial Adnoc Drilling island. Photo: Adnoc

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  An Adnoc employee uses a training simulator used to enhance workplace safety. Photo: Adnoc

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  An Adnoc artificial drilling island. The state oil company plans to raise production capacity to 5 million barrels per day by 2030. Photo: Adnoc

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  Adnoc Drilling made $281.6 million in net profit in the first half of 2021, with revenue hitting $1.12 billion. Photo: Adnoc

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  Adnoc Drilling will offer a fixed dividend of $325m for the second half of 2021. Photo: Adnoc

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  Equipment inspection at an Adnoc Drilling site. The company expects to increase its dividend by 5 per cent annually over the next five years, from $650m. Photo: Adnoc

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  Adnoc Drilling operates more than 9,600 wells across an area of 19,960 square kilometres. Photo: Adnoc

Adnoc also said more than $900m worth of wellheads, and more than $700m worth of downhole completion equipment will be manufactured in the UAE, in addition to all liner hangers.

Furthermore, $185m in foreign direct investment will flow into the UAE’s economy to establish two wellheads manufacturing and assembly complexes, enhance drilling-related equipment manufacturing and assembly, as well as enable the local manufacturing of 20 new drilling completion products.

The procurement award for liner hangers and cementing accessories is worth up to $337m and 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, the UAE agents of Weatherford and Baker Hughes, respectively.

The award for cementing accessories was made to Al Ghaith Oilfield Supplies & Services, Best Pick General Trading and Al Mansoori Specialized Engineering, UAE agents for Downhole Products, NeOz Energy and Sledgehammer, respectively.

“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,” Dr Al Jaber, said.

“This is yet another example of how Adnoc is working to support the growth and diversification of the UAE’s economy, in line with the Principles of the 50 and the leadership’s wise directives.”

Adipec 2021 day one - in pictures

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  Suhail Al Mazrouei, Minister of Energy and Infrastructure, speaks at the Abu Dhabi International Petroleum Exhibition and Conference. All photos: Victor Besa / The National

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  Mohamed El-Erian, chief economic adviser of Allianz, addresses a session at Adipec.

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  Paul Polman, former chief executive of Unilever and co-chair at Global Commission for Economy and Climate, attends a session at Adipec.

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  Adipec participants attend a session with Paul Polman, former chief executive of Unilever and co-chair at Global Commission for Economy and Climate, holding centre stage.

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  Adipec will run from November 15 to November 18 at the Abu Dhabi National Exhibition Centre.

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  Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, says oil and gas industry will have to invest more than $600bn annually until 2030 to keep up with expected demand.

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  Adipec 2021 is the first major global event after Cop26, which concluded on Sunday.

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  Adipec is said to be a critical bellwether for the fortunes of the energy industry in the middle of great change.

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  Dr Fatih Birol, left, executive director of International Energy Agency, and John Defterios, Professor of Business at NYU Abu Dhabi attend an Adipec session.

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  This year's event is taking place after the UAE, Saudi Arabia and Bahrain all committed to achieving a net-zero future by the middle of the century.

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  Alfred Stern, chief executive of OMV, attends a panel discussion on 'What is the New Normal for Demand?'

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  Yousef Gamal El Din, anchor of Bloomberg, and Russell Hardy, chief executive at Vitol, during a session on 'Trading Spotlight: The Diversification of Energy Markets'.

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  Nicolas Terraz, of TotalEnergies, attends Adipec session on 'What is the New Normal for Demand?'

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  Yaser Al Mazrouei, executive director of Upstream Directorate at Adnoc, attends the Adipec session on 'What is the New Normal for Demand?'

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  Lorenzo Simonelli, chairman and chief executive of Baker and Hughes, during the Adipec session on 'What is the New Normal for Demand?'

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  Mansoor Al Hamed, chief executive of Mubadala Petroleum, attends the Adipec session on 'What is the New Normal for Demand?'

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  Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs, attends the opening ceremony at the 37th Abu Dhabi International Petroleum Conference and Exhibition. Photo: @HHMansour via Twitter

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  Sheikh Mansour bin Zayed and Dr Sultan Al Jaber take in the atmosphere at the 37th Adipec. Photo: @HHMansour via Twitter