Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, is looking to expand into the GCC as drilling activity increases after a surge in crude oil prices, according to the company’s chief executive.
Rig activity in the GCC, which includes Bahrain, Kuwait, Qatar and Saudi Arabia, is a “huge” area in which Adnoc Drilling can “easily perform”, Abdulrahman Al Seiari told The National in an interview.
The Middle East’s rig count, an early indicator of oil and gas production, stood at 326 last month, up nearly 19 per cent from the same period a year earlier, according to energy services firm Baker Hughes.
The aim of any potential mergers and acquisition activity or stake purchases would be to expand into the Gulf region first, Mr Al Seiari said, adding that the company would take it “step by step”, given a large backlog of contracts in Abu Dhabi.
Adnoc Drilling, which is majority owned by Adnoc, was listed on the ADX in October last year and has rapidly expanded operations in recent months.
The company, which has this year secured contracts worth $8.85 billion, plans to acquire dozens of rigs by 2025 to support Adnoc's oil production capacity target of 5 million barrels per day by 2030.
Adnoc Drilling would focus more on onshore activity for the rest of this year and 2023, Mr Al Seiari said.
“There are some other projects which are being talked about, like unconventionals, which will materialise stronger,” he said.
In 2020, Abu Dhabi announced the discovery of substantial recoverable unconventional oil resources onshore, estimated at 22 billion barrels, and an increase in conventional oil reserves of 2 billion barrels.
Adnoc Drilling is also supporting the operations of several international oil companies who have won rights to drill for hydrocarbons in the UAE.
Last year, Adnoc awarded exploration rights for an offshore block to a Pakistani consortium for $304.7 million, marking the first deal with energy companies from the South Asian nation.
In 2020, the Abu Dhabi-based company awarded Occidental Petroleum onshore exploration rights in a Dh514 million ($140 million) contract.
“We are supporting them in the appraisal and exploration activities now, which is expected in the coming couple of years to go to the development phase,” said Mr Al Seiari.
Adnoc Drilling has provided integrated drilling services to Adnoc Onshore and Offshore since 2019. The company’s highly competitive position, integrated capabilities and technical expertise have helped to increase the efficiency of Adnoc’s drilling operations.
The company is in the early stages of discussion about a possible foray into the manufacturing of oil and gas equipment, according to Mr Al Seiari.
“It is something which we're talking about internally, about focusing on new streams,” he said.
“When we talk about the oil industry, there are a lot of products that I believe can be easily made in the UAE."
Oilfield drilling is a complex process involving multiple pieces of equipment to ensure proper extraction, cleaning and safety.
“In partnership with certain technology companies, we can do it in UAE … chemicals that we are extensively using can also be made here,” Mr Al Seiari said.
Oil and gas companies worldwide have benefited from a surge in crude prices since Russia invaded Ukraine. Brent, the benchmark for two-thirds of the world’s oil, has gained nearly 16 per cent in the past 12 months, despite concerns of an economic slowdown.