Adnoc Drilling secures contracts worth $3.4bn to boost offshore capacity

Contracts to help company expand its offshore drilling activities and boost production capacity

An oil pipeline control head sits on display outside Adnoc headquarters in Abu Dhabi. Bloomberg

Abu Dhabi National Oil Company has awarded two contracts worth more than $3.4 billion to its drilling unit to boost offshore production capacity.

The contracts, valued at $1.5bn and $1.9bn, respectively, were awarded by Adnoc Offshore to Adnoc Drilling, the state-owned oil company said in a statement on Thursday.

As part of the contracts, eight offshore jack-up rigs will be hired along with manpower and equipment to support drilling operations across Adnoc’s offshore fields, which account for about half of the company’s production capacity.

The investment will “significantly expand our drilling activity to accelerate growth, drive value and responsibly unlock the UAE’s resources in response to globally rising demand for energy”, said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, and managing director and group chief executive of Adnoc.

Adnoc Drilling is the largest national drilling company in the Middle East by rig fleet size, with 105 owned rigs, including 27 offshore jack-up units, one of the largest operational jack-up fleets in the world.

Over the course of the 15-year contracts, Adnoc Drilling’s rig fleet will enable Adnoc and its strategic international partners to “further unlock Abu Dhabi’s offshore oil and gas resources, creating significant value for Adnoc, its partners and the UAE”, the company said.

The new contracts come as the state oil producer plans to significantly increase investment in hydrocarbons and raise its output capacity to five million barrels per day by 2030.

“Adnoc Drilling’s state-of-the-art fleet and market-leading capabilities will be a key enabler as Adnoc strengthens its position as a leading low-cost and low-carbon energy producer. We are focused on delivering on our 2030 strategy, in support of the directives of our wise leadership to grow and diversify the UAE’s economy,” Dr Al Jaber said.

More than 80 per cent of the value of the latest contracts will flow back into the UAE’s economy under Adnoc's In-Country Value (ICV) programme, helping to diversify the economy and encourage local economic growth, Adnoc said.

Last week, Adnoc Drilling also secured two contracts totalling $2bn linked to Adnoc's Hail and Ghasha development project.

Also last week, Adnoc announced a second discovery of natural gas in 2022 in the first exploration well in Abu Dhabi’s Offshore Block 2 exploration concession operated by Eni.

The discovery from a new, deeper reservoir indicates the presence of one trillion to 1.5 trillion standard cubic feet of raw gas, almost doubling the discovered field volume, Adnoc said at the time.

Adnoc's board approved plans last year to spend Dh466bn ($126.88bn) 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.

Adnoc Drilling's first-quarter net income surged 59 per cent on revenue growth, it said in May, with net profit for the three-month period to the end of March rising to $175 million.