South Korean giant Samsung Engineering and Italy’s Tecnimont have confirmed the award of an early engineering and procurement contract for Abu Dhabi National Oil Company’s (Adnoc’s) multi-billion dollar Hail & Ghasha sour gas development.
Samsung said in a statement on Tuesday that the company has received a letter of award (LoA) from Adnoc for a pre-construction services agreement (PCSA) meant for the Hail & Ghasha project, as a member of the joint venture.
“The contract was awarded to Samsung Engineering and their joint venture partners Technip Energies and Tecnimont,” it noted.
The award confirms a recent Upstream report that Adnoc had finalised the PCSA deal, selecting two leading international contracting groups for the giant sour gas project.
While the onshore PCSA has been handed to the Samsung-Tecnimont-Technip joint venture, the offshore deal is likely to be awarded to a grouping of Abu Dhabi’s National Petroleum Construction Company, China Petroleum Engineering & Construction Corporation and Italy’s Saipem, Upstream understands.
Tecnimont said: “The overall contract value to the JV for the early engineering and procurement works on the onshore facilities is approximately $80 million.
“The PCSA scope of work also includes the preparation of an open-book estimate for the full project delivery scope, which will be considered as part of the client’s final investment decision.”
Tecnimont noted that the “awards come as Adnoc accelerates gas expansion, as part of its low-carbon growth strategy to continue responsibly meeting global energy needs”.
Samsung Engineering chief executive Hong Namkoong said that with its expertise in the United Arab Emirates market and its extensive know-how in gas development projects, the company and its joint venture partners are “confident in executing the project successfully”.
Technip Energies also confirmed the award of PCSA in a statement on Tuesday.
Technip Energies the chief executive Arnaud Pieton said it would continue from the project’s successful FEED execution to the initial activities for the onshore facilities, and “to prepare an open-book cost estimate for project delivery”.
He noted that together with the joint venture partners the company will “work with Adnoc and their international concession partners to continually optimise the project and successfully meet their requirements”.
The two Hail & Ghasha contractual packages are expected to be together worth billions of dollars once the project gets to the execution phase.
The development is at the heart of Abu Dhabi’s drive to expand its gas production capacity by the end of this decade.
After completion of the project’s initial engineering phase, the two groups will work on the onshore and offshore engineering, procurement and construction packages, project watchers said.
A final commercial offer for Hail & Ghasha’s execution is likely to be submitted by the middle of this year by the two groups, Upstream understands.
Adnoc’s unique execution model for Hail & Ghasha envisages a fast-track development expected to produce up to 1.5 billion cubic feet per day of gas at peak.
Gas export plans
Development of the Hail and Ghasha fields is crucial to Abu Dhabi’s ambition to achieve gas self-sufficiency for the UAE and emerge as a key gas exporter in the long term.
“Overall, the development of our abundant sour resources will support UAE gas self-sufficiency, deliver substantial in-country value to drive economic growth and reinforce the country’s role as an international hub of excellence in sour gas operations,” Adnoc told Upstream last year.
The Hail & Ghasha project is expected to provide feedstock for Abu Dhabi’s gas export plants, along with its ambition to emerge as a key hydrogen producer.
The sour gas project is likely to involve offshore drill centres, subsea pipelines, umbilicals, cables and risers. It also involves an offshore processing plant and central living quarters.
Work on the Manayif onshore processing plant, export pipelines, utilities and other related facilities is part of a wider workscope for the development, project watchers said.
Adnoc’s partners in the Ghasha concession include Eni on 25%, Wintershall Dea having 10%, and OMV and Lukoil each holding 5%.
The Hail and Ghasha fields are located offshore Abu Dhabi in water depths of less than 15 metres.