Abu Dhabi National Oil Company (Adnoc) is poring over commercial bids for at least four key packages linked with its giant $20 billion Hail & Ghasha offshore sour gas development.

Multiple people with direct knowledge of the tender process told Upstream that price bids for the engineering, procurement and construction packages were finally submitted in the last week of February, after being pushed back numerous times.

“This is a very positive development for Adnoc’s ambitious Hail & Ghasha development and indicates that the Abu Dhabi giant and its partners are moving closer to a final investment decision,” one person said.

The tender process for the multibillion-dollar EPC packages was launched in 2019. However, it was delayed by several months after Adnoc last year initiated a thorough cost-optimisation process as global oil and gas demand plummeted in the wake of the coronavirus outbreak.

FID on the cards?

A second person closely associated with the tender process said the operator is expected to reach a final investment decision during the second half of this year, although another argued that the project’s capital expenditure will have to be substantially scaled down ahead of a potential project sanction.

In response to a query on the Hail & Ghasha’s tender process, an Adnoc spokesperson told Upstream that the company “does not comment on market speculation".

“We are responsibly progressing our strategic projects, including Ghasha and Dalma, to unlock value and maximise profitability for Adnoc, our concession partners and the UAE. We will share news of the EPC awards in due course,” he said.

Adnoc has previously said that the Hail & Ghasha project — which is located in the Ghasha concession — remains on course despite the industry downturn.

“We remain committed to delivering the development to achieve a capacity of over 1.5 billion cubic feet per day around the middle of the decade,” the company said last year.

Multibillion-dollar development

Hail & Ghasha is the largest sour gas project being executed in the Middle East this year and its cost was initially pegged at upwards of $20 billion.

However, with Adnoc's ongoing optimisation exercise, the project's cost is expected to be somewhat lower, project observers have said.

Some of the international partners in the asset — including Italy's Eni — said last year that they will review the Hail & Ghasha development in the wake of the Covid-19 pandemic.

The project is likely to produce up to 1.5 Bcfd of gas by the middle of the decade, as part of Adnoc's master plan and 2030 long-term strategy.

Bidders in fray

Of the four substantial EPC contracts up for grabs, Package 1 includes offshore drilling centres, subsea pipelines and compression platforms.

Those said to have submitted commercial offers include a grouping of Italy’s Saipem and Abu Dhabi-based National Petroleum Construction Company (NPCC), and a consortium of McDermott International of the US with Spain’s Tecnicas Reunidas and a pairing of UK-based Petrofac with Malaysia's Saupra Energy.

The workscope for Package 2 comprises facilities to be installed on the project's artificial islands and involves the Ghasha offshore processing plant and central living quarters facilities.

Bidders for this contract include a grouping of NPCC, Saipem and China Petroleum Engineering & Construction Corporation (CPECC), a consortium of Petrofac and South Korean giant Samsung, Hyundai E&C, plus a grouping of Greek player Archirodon with China’s Sinopec.

Package 3 includes onshore utilities and tie-ins required for the sour gas development.

The contenders for this workscope are believed to include a consortium of Petrofac and Samsung, a grouping of Archirodon and Sinopec, and Italy’s Tecnimont.

Package 4 comprises a major onshore gas plant at Manayif aimed at processing sour gas from the two fields and is said to be the largest package on offer.

The bidders for the fourth package include Tecnicas Reunidas with McDermott, consortiums of Tecnimont with India’s Larsen & Toubro and Saipem with CPECC, plus Petrofac, which is bidding on its own.

Artificial islands

Package 5, which involves work on Hail & Ghasha's artificial islands, was earlier awarded by Adnoc to the United Arab Emirates' National Marine Dredging Company (NMDC).

That $1.4 billion contract includes dredging, land reclamation and marine construction for multiple artificial islands in the first phase of development.

NMDC is building 10 new artificial islands and two causeways, as well as expand an existing island, Al Ghaf.

The Hail & Ghasha offshore fields are located off Abu Dhabi in water depths of less than 15 metres.

Ghasha is estimated to hold more than 5 trillion cubic feet of gas, although this resource figure is unofficial.

Field Development

Bids are in: Contractors submit commercial offers for giant Abu Dhabi sour gas project