Front runner emerges for major role in $6 billion-plus Adnoc offshore expansion
Expansion of Adnoc’s Lower Zakum and Upper Zakum oilfields is crucial to its plans to boost emirate’s oil production capacity
A leader has emerged for one of the largest engineering, procurement, construction and installation (EPCI) packages on offer from Abu Dhabi National Oil Company (Adnoc) for the further expansion of its huge Lower Zakum oilfield offshore the UAE.
Adnoc is expanding the capacity of some of its largest offshore oilfields as a part of its P5 programme, which is aimed at ramping up its oil production capacity to 5 million barrels per day by 2027, from the existing 4.85 million bpd.
However, industry experts have suggested that the pace of progress on the multiple expansion projects means state giant Adnoc could achieve its 5 million bpd target much earlier than anticipated.
A trio of EPCI deals are up for grabs, together touted to be worth upwards of $6 billion, but more clarity on precise valuations could emerge in the coming weeks.
A front runner has emerged for the key offshore package comprising the first phase of the Lower Zakum long term development plan (LTDP-1), multiple people familiar with the bid process told Upstream.
The offshore package for LTDP-1, dubbed Package 4, comprises multiple offshore facilities for the LTDP-1 project.
NMDC Energy of the United Arab Emirates is said to be the front runner for Package 4 and is likely to emerge as Adnoc's preferred contractor, one person said.
“NMDC Energy is believed to be the front runner for Package 4, but no final decision has been taken yet by the operator,” another one noted.
McDermott International of the US and China’s Offshore Oil Engineering Company (COOEC) have also been chasing the Package 4 deal and earlier submitted bids, Upstream understands.
Work on Package 4 includes seven new wellhead towers, multiple subsea pipelines and cables, a riser platform, flare stack towers and associated brownfield modifications.
Spain’s Tecnicas Reunidas and a grouping of Indian engineering giant Larsen & Toubro (L&T) and UK’s Petrofac are the two players vying for the onshore Package 2, which involves work on the Al Omairah Island topsides facilities, a third one noted.
Both players still stand a strong chance for Package 2 and Adnoc has yet to select its preferred contractor, he added.
The surface facilities required for Package 2 involve drill pad areas, a riser platform, offshore flare structures, export gas compression trains, gas dehydration trains and several other associated facilities.
A third EPCI package, Package 5, involves work on facilities at Adnoc’s Das Island.
Tecnicas Reunidas is said to have an edge for Package 5 and is rumoured to have submitted a “competitive offer”, but rival Target Engineering Construction Company of the UAE is still in contention, one industry source said.
"Both parties are in the race and are in talks with Adnoc," the source noted.
At least three new oil processing facilities, desalter and dehydration trains, a new seawater offshore platform and other related facilities are on offer.
While there's no clarity yet on the timeline of LTPD-1 awards, the industry source has suggested that the EPCI deals are likely to be finalised during the first half of this year.
An Adnoc spokesperson declined to comment on an Upstream query involving the LTDP-1 project.
A spokesperson at Tecnicas Reunidas said that the company does not make any statement or provide information regarding any project "when it is still in the... commercial steps and has not been formally awarded".
Petrofac declined to comment on Upstream’s query on the Lower Zakum development, while L&T and NMDC Energy did not respond to similar queries.
Production boost
LTDP-1 is an island-based concept, aimed at ramping up Lower Zakum’s output to 520,000 bpd in the next few years.
“Lower Zakum LTDP-1 is an island-based concept wherein all key schemes are being integrated to scale up the field’s oil production to 520,000 bpd by the end of 2027 and sustain [it] until 2040,” one industry source noted.
The huge Lower Zakum oilfield lies in the central Persian Gulf, about 65 kilometres northwest of Abu Dhabi.
The EPS-2 project envisages boosting Lower Zakum’s production potential to 470,000 bpd by 2025 and sustaining that until 2027.
The Lower Zakum field is said to be producing well above 400,000 bpd, but the exact output level could not be independently confirmed by Upstream.
Adnoc holds a 60% stake in Lower Zakum and its partners are Japan’s Inpex, China National Petroleum Corporation and India’s ONGC Videsh, each on 10%, plus Italy’s Eni and French giant TotalEnergies with 5% apiece.