State energy company Abu Dhabi National Oil Company (Adnoc) and its subsidiaries set the pace for regional construction contract awards in 2009 and 2010, committing to deals worth a staggering $40bn.
To date, 2011 has been much quieter when it comes to contract awards. However, it has been a year of manic activity for the contractors who won multimillion-dollar and billion-dollar contracts as they have mobilised the equipment and manpower necessary to complete the projects they secured over the previous 24 months.
Adnoc subsidiary Adco has ambitious plans to increase overall onshore output to 1.8 million barrels of oil a day
Meanwhile, Adnoc has continued to push ahead with its plans to boost oil and gas production capacity in the emirate to 3.5 million barrels a day (b/d) and 7 billion cubic feet a day (cf/d) respectively by 2018. Abu Dhabi currently has a production capacity of about 2.6 million b/d of oil and about 5.7 billion cf/d of gas.
|Abu Dhabi crude production|
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|Source: IMF (does not include condensates)|
Onshore, most oil projects are being developed by Adnoc subsidiary Abu Dhabi Company for Onshore Operations (Adco), which has ambitious plans to increase overall output on the mainland to 1.8 million b/d, from the current 1.4 milllion b/d.
Meanwhile, two Adnoc-led firms Zakum Development Company (Zadco) and Abu Dhabi Marine Operating Company (Adma-Opco) are working towards an equally ambitious target. They plan to add 650,000 b/d of production capacity to bring total offshore production capacity to 1.75 million b/d.
Adco’s plans and projects are the most advanced so far. In January 2009, the firm awarded the first engineering, procurement and construction (EPC) contract for its production boost on the Shah, Ahil and Asab (SAS) projects, worth $3.5bn in total.
The scheme should bring field output up to 600,000 b/d, from 450,000 b/d. Sources close to the SAS project say that it is on course for completion either by the end of 2012 or early 2013. The onshore firm’s second major contract award was made in March 2009, when South Korea’s SK Engineering & Construction won the $818m deal to build new gas compression facilities to boost oil production at the Bab oilfield.
Sources with knowledge of the scheme say that this project is also largely on track and major construction works should be completed in the final three months of 2011, with commissioning scheduled for early 2012.
Major EPC deals for work at the Bab Thammam, Habshan, Qusawirah and Bida al-Qemzan fields were also awarded in 2010. Overall, these projects, along with the Bab compressor project, should add the remaining 250,000 b/d of capacity required for Adco to hit its targets.
More recently contracts have been awarded by Zadco and Adma-Opco. By 2015, Zadco hopes to have added 250,000 b/d of production to its fields, bringing its total output to 750,000 b/d, while Adma-Opco has been set the target of raising its production by 400,000 b/d to produce 1 million b/d by 2015.
Zadco, which controls the offshore Satah, Umm al-Dalkh and Upper Zakum fields is developing its projects under a masterplan called UZ750. The firm has been working on the plan with the UK’s Amec since 2008.
In 2011, Zadco awarded the $485m contract to develop the Satah field, boosting its production capacity to 25,000 b/d.
Artificial islands in Abu Dhabi
In late 2009, the firm signed a $626m contract with the local National Marine Dredging Company to build four artificial islands, which will act in place of permanent drilling and production rigs for the UZ750 project. It is now in the process of tendering a series of contracts to build production facilities on the islands.
The first contract will cover early production facilities, which will boost production by 100,000 b/d. International engineering firms are currently bidding on the $800m EPC deal for this stage of the project, which is scheduled for completion in 2014. The second and third phases, which are scheduled to boost capacity to 700,000 b/d, and then 750,000 b/d, are planned for 2016 and 2017/18 respectively.
Meanwhile, Adma-Opco is developing the Lower Zakum, Umm Shaif, Nasr and Satah al-Razboot (Sarb) fields. In 2011, India’s Larsen & Toubro won the EPC contracts to build early production facilities at both fields, which were worth a total of $639m.
Later phases of these projects will add 165,000 b/d of capacity across the two fields. The firm has also awarded a $300m contract to ‘demothball’, or renovate for use, a major production facility at the Lower Zakum field, which should help boost the field’s capacity by 100,000 b/d. Contracts covering the development of the Nasr and Umm Shaif fields are expected to be tendered in 2012.
|Average Abu Dhabi crude oil export price|
|($ a barrel)|
At the same time, Adnoc has been investing to expand the country’s gas output. The UAE has the world’s seventh largest gas reserves, according to the UK’s BP, with the majority located in Abu Dhabi.
However, the country faces a major shortage of gas due to increasing domestic demand and existing long-term export agreements. Abu Dhabi Gas Industries (Gasco), an Adnoc subsidiary, has been working to make up the shortfall and is currently developing two major schemes to boost output from 5.7 billion cf/d to more than 7 billion cf/d from 2015 onwards.
In July 2009, Gasco awarded EPC deals worth $10bn on its massive integrated gas development. The scheme will transfer 1 billion cf/d of high pressure gas from the offshore Umm Shaif field to new onshore processing facilities at Habshan and Ruwais via Das island.
Meanwhile, in 2010 and 2011, the firm awarded contracts for the $10bn Shah gas development, which should add 1 billion cf/d of production capacity to the country’s gas output. This project is scheduled to be commissioned in late 2014 or early 2015.
Adnoc’s current project slate makes it look as if the company should be operating at maximum capacity, but there is more to come.
According to regional projects tracker MEED Projects, the state energy giant plans to award a further $22bn of contracts between the third quarter of 2011 and the end of 2012.