Adnoc awards $658m in framework agreements to boost crude production capacity

Deals covers company's onshore and offshore fields and will run for five years with option for another two

The awards for cementing services will support the continuing expansion of Adnoc's drilling activities. Photo: Adnoc

Adnoc awarded $658 million in framework agreements on Thursday for cementing services as it continues to invest to enable drilling growth and expand its crude oil production capacity.

The agreements were awarded to Haliburton, Baker Middle East, Emirates Western Oil Well Drilling and Maintenance, NESR Energy Services and Emjel Oil Field Services after a competitive tender process, the company said in a statement.

The deals cover Adnoc's onshore and offshore fields and will run for five years with an option for a further two years, a statement said.

“The awards for cementing services will support the ongoing expansion of Adnoc's drilling activities as we grow our production capacity, strengthening our position as a reliable global supplier of some of the world’s most carbon efficient barrels," said Yaser Saeed Almazrouei, Adnoc's upstream executive director.

"As part of our strategy, we are prioritising in-country value and these awards will enable careers for UAE nationals and new opportunities for the private sector, directly supporting the objectives of the UAE’s Principles of the 50.”

The latest project is part of Adnoc's efforts to boost oil production capacity to 5 million bpd by 2030 and achieve gas self-sufficiency for the nation. The UAE is Opec's third-largest crude producer.

The company plans to increase its national reserves of 4 billion stock-tank barrels of oil and 16 trillion standard cubic feet of natural gas, and spend $127bn in capital expenditure to bolster its upstream production capacity and downstream portfolio.

Last month, Adnoc awarded framework agreements valued at Dh7.1bn ($1.93bn) to support drilling growth in the country.

The pacts for wireline logging and perforation services are the largest 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.

Including the latest awards, the total value of Adnoc's drilling-related framework agreements and procurement awards since November 2021 has now reached more than $8.5bn.

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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

Cementing is a crucial step in the drilling and completion of oil and gas wells and involves mixing cement slurry, additives and water and pumping the mixture between the rock formation and well casing to protect and seal the wellbore.

Under its 2030 strategy, Adnoc is modifying 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, the company said.

The "smart nature" of the latest agreements will enable Adnoc to realise "hundreds of millions of dollars in cost savings", it said.

More than 65 per cent of the award value could flow back into the UAE economy under Adnoc’s In-Country Value programme over the duration of the agreements.