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• 
  Adnoc’s upstream goals drive spending spree

  23 October 2024

  

   

  Abu Dhabi National Oil Company (Adnoc Group) spent close to $22bn last year on upstream projects – mainly on the $17bn Hail and Ghasha sour gas production project – making it one of the best years on record for oil and gas project spending in the UAE.

  While the energy giant may not be able to match its 2023 level of capital expenditure (capex) on oil and gas production projects this year, total capex on upstream oil and gas projects in 2024 is still expected to be steep, as Adnoc strives to attain an oil production capacity of 5 million barrels a day (b/d) by 2027 and become self-sufficient in gas production by the end of this decade.

  In fact, if the Hail and Ghasha gas programme is put to one side, Adnoc has already exceeded last year’s upstream project spending level this year.

  Key offshore projects awarded

  Adnoc Group subsidiary Adnoc Offshore has been a driving force behind upstream project spending in the UAE this year, awarding engineering, procurement and construction (EPC) contracts for projects to increase the oil production potential of the Upper Zakum and Lower Zakum offshore oil field developments.

  Located 84 kilometres (km) offshore in Abu Dhabi, Upper Zakum is the world’s second-largest offshore oil field and fourth-largest oil field. Adnoc Offshore launched the first phase of the programme to raise Upper Zakum’s oil production capacity to 1.2 million b/d in 2019. The initial goal was to increase the field’s output potential to 1 million b/d by 2024, which was later increased to 1.2 million, with the project execution timeline eventually being extended.

  This target is to be achieved through the UZ 1.2MMBD EPC-1 project. In April, Adnoc Offshore awarded the main EPC contract for the project, worth $825m, to UAE-based Target Engineering Construction Company.

  Separately, Adnoc Offshore and its partners in the Lower Zakum concession – located 65km northwest of Abu Dhabi – intend to sustain oil production from the asset at its current level of 450,000 b/d until 2025, and then increase output to 470,000 b/d.

  To this end, Adnoc Offshore awarded the main contract for a project known as the Lower Zakum Early Production Scheme 2 and Proved Developed Producing to Abu Dhabi’s NMDC Energy in the second quarter.

  Onshore project spending

  The onshore business of Adnoc Group, Adnoc Onshore, has also been a major spender this year as it pushes ahead with projects earmarked for its parent company’s 5 million b/d target. In September, Adnoc Onshore awarded a contract, estimated to be worth $900m-$1bn, for a project involving the modification of wells at the Bab onshore oil field development in Abu Dhabi, to boost the asset’s crude production potential.

  Abu Dhabi-based Robt Stone Middle East won the contract for the project, which is the second phase of a campaign by Adnoc Onshore to provide artificial lift to 184 new and existing wells at the Bab field’s seven reservoirs. Providing artificial lift to wells will help improve oil recovery from the reservoirs, sustain an oil production level of 485,000 b/d from the field and increase output beyond 2028.

  Earlier in the year, Adnoc Onshore awarded main contracts worth a total of over $1.5bn for two packages on a project involving the conversion of wells and the installation of associated tie-ins at the South East cluster of oil fields in Abu Dhabi.

  Package three of the project covers the EPC of well tie-ins and other associated structures at the Asab and Sahil oil fields, while package four covers the Shah, Qusahwira and Mender fields. Adnoc Onshore split the scope of work on the packages and appointed two contractors for each package.

  Project capex on the rise

  Adnoc Group’s upstream subsidiaries are expected to award further project contracts before the end of the year in order to stay on top of their targets.

  Adnoc Offshore is set to award a major contract estimated to be worth $2bn for a project to increase production from the Umm Shaif offshore oil field in Abu Dhabi. US-based oil and gas contractor McDermott International is in line to win the main contract for the Umm Shaif Accelerated Development project.

  The project aims to increase the Umm Shaif oil field’s output from about 275,000 b/d at present to 390,000 b/d by 2027, and to sustain that level of production until at least 2036.

  Meanwhile, Adnoc Offshore could also award the main EPC contract for the multibillion-dollar Lower Zakum Long-Term Development (LTDP-1) project by the end of the year. The goal of the project is to raise the asset’s output capacity to 520,000 b/d by 2027 and maintain that level until 2034.

  Contractors submitted technical bids for the Lower Zakum LTDP-1 project in August and are in the process of preparing commercial bids.

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  Indrajit Sen
• 
  Biden leaves a mixed legacy

  23 October 2024

  Commentary
  Edmund O'Sullivan
  Former editor of MEED

  There’s no forecasting the winner of this year’s US presidential poll, but there is one certainty.

  Joe Biden will exit the White House next January and be out of front-line politics for the first time in more than five decades.

  History is rarely kind to presidents after they leave office. It is likely that, in due course, Biden will be remembered most for being the oldest person elected president. And he joins the small group of US presidents forced out of office, as he effectively was.

  Biden’s fans will point to significant domestic achievements, including the decrease in the number of Americans without health insurance for the first time to under 10% of the population. Job growth in Biden’s first three years outperformed any previous president’s and unemployment in 2021-23 was below 4% for the first time since the 1960s. Wage growth has outstripped inflation, which has dropped sharply since hitting almost 10% in the summer of 2022. The stock market has boomed and violent crime is down.

  History is rarely kind to presidents after they leave office

  Biden’s big domestic negative is immigration. The number of encounters at America’s border with Mexico has soared and hit a record of 2.2 million in 2023. 

  Biden’s apologists blame the Republican majority in the House of Representatives for derailing reform legislation that was making its way through the Senate. But worries about immigration damaged his opinion poll ratings.

  In a normal election, nevertheless, a presidential incumbent with this kind of record should have been a shoo-in. It is the main reason Biden resisted pressure to step down even after his cognitive decline was impossible to conceal. He believed he was doing a good job and should have been allowed to stay on.

  Foreign policy

  Outside the US, Biden’s reputation will mainly be shaped by his foreign policy.

  The record there is baleful. The chaos of the withdrawal from Afghanistan in 2021 was followed by a refusal to negotiate with Russia about Ukraine in 2022 and the lamentable failure to constrain Israel since October 2023.

  His Secretary of State Antony Blinken is widely viewed as the worst in US history.

  Reliable friends including Jordan and most of the Gulf Arab states have been alienated, possibly permanently.

  Biden’s legacy is objectively mixed. But that’s no longer his problem.

  The US foreign policy mess will divert much of the initial energy of America’s next president. But the ultimate sadness of Biden’s lifetime of public service is that, whoever wins in November, they will almost certainly blame him for it.

  ---

  Connect with Edmund O’Sullivan on X

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  More from Edmund O’Sullivan:

  > Desperate days drag on
  > The beginning of the end
  > The death of political risk
  > Italy at centre of new reduced Europe
  > US foreign policy approach remains adrift
  > Rainmaking in the world economy
  > New shock treatment for Egypt’s economy
  > Syria’s long march in from the cold
  > Lebanon’s pain captured in a call from Beirut
  > Troubled end to 2023 bodes ill for stability

  ---

  

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  Edmund O’Sullivan
• 
  Jubail-Buraydah water pipeline decision imminent

  23 October 2024

  Saudi Water Partnership Company (SWPC) is expected to announce the bid results for a tender to develop and operate Saudi Arabia’s second independent water transmission pipeline (IWTP) project, which links Jubail in the kingdom's Eastern Province and Buraydah in the Qassim region.

  According to a source familiar with the project, relevant authorities "are reviewing the bids and a decision should come within at least a month".

  The planned Jubail-Buraydah IWTP is a 587-kilometre (km) pipeline that will be able to transmit 650,000 cubic metres a day of water.

  According to SWPC, the teams that submitted proposals for the contract earlier in August are: 

  • Aljomaih Energy & Water (Jenwa, local) / Nesma Company (local) / Buhur for Investment Company (local)
  • Vision Invest (local) / Abu Dhabi National Energy Company (Taqa, UAE)

  The Jubail-Buraydah IWTP project is larger than the kingdom's first IWTP linking Rayis and Rabigh, which a consortium including the local Alkhorayef Water & Power Technologies Company and Spain's Cobra Instalaciones y Servicios will develop and operate at a cost of SR7.78bn ($2bn).

  SWPC issued the request for proposals for the Jubail-Buraydah IWTP scheme to the prequalified bidders in October last year.

  The state water offtaker qualified 22 companies to bid for the contract in April 2022. 

  The transaction advisory team for the client comprises the US/India’s Synergy Consulting as financial adviser and the local Amer Al-Amr and Germany’s Fichtner Consulting as legal and technical advisers, respectively.

  SWPC’s obligations under the water transfer agreement will be guaranteed by a credit support agreement entered into by the finance ministry on behalf of the Saudi government.

  The project is part of the kingdom’s National Water Strategy 2030, which aims to reduce the water demand-supply gap and ensure desalinated water accounts for 90% of national urban supply, to reduce reliance on non-renewable ground sources.

  Related read: SWPC focuses on desalination and sewage plants

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  Jennifer Aguinaldo
• 
  Saudi Arabia evaluates 2GW energy storage bids

  23 October 2024

  National Grid Saudi Arabia, a wholly-owned subsidiary of Saudi Electricity Company (SEC), is evaluating bids for the contract or contracts to supply battery energy storage systems (bess) with a total combined capacity of up to 2,500MW.

  According to a source familiar with the project, the SEC entity solicited bids directly from equipment manufacturers, which include China's Sungrow, Hithium and Huawei Technologies, among others, to supply batteries, which will be installed by an engineering, procurement and construction (EPC) contractor.

  It is understood that SEC has tendered the  EPC package or packages separately.

  MEED previously reported that the planned facilities, each with a capacity of 500MW or roughly 2,000 megawatt-hours, are located in or within the proximity of the following key cities and load centres:

  • Riyadh
  • Qaisumah
  • Dawadmi
  • Al-Jouf
  • Rabigh

  The main applications for the planned bess facilities include load shifting, black start, frequency regulation and voltage support.

  They are envisaged to replace part load operation of existing power plants by charging and discharging electricity according to the system load variations and primary and secondary reserves, among other potential applications.

  In August, National Grid SA awarded the EPC contracts for three energy storage systems to Riyadh-based investment group Algihaz Holding.

  The projects are located in Najran, Madaya and Khamis Mushait.

  According to an industry source, the contracts are valued at more than $800m.

  Surging growth

  The overall capacity of deployed battery energy storage systems globally is expected to reach 127GW by 2027, up from an estimated cumulative deployment of 36.7GW at the end of 2023, according to GlobalData.

  The global information services provider cited Chinese companies BYD and CATL and South Korean companies LG Energy Solutions and Samsung SDI among the top battery technology providers globally.

  Carmakers Tesla, Volkswagen, Stellantis, General Motors, Mitsubishi Motors and Hyundai were identified as the key end markets for battery products so far.

  GlobalData expects battery energy storage deployment to increase "due to a large number of countries opting for battery storage systems to enhance their power sector transformation".

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  Jennifer Aguinaldo
• 
  Saudi Arabia receives 4.5GW solar and wind prequalifications

  22 October 2024

  

   

  On 22 October, utility and renewable energy developers submitted their statements of qualifications (SOQs) for the contracts to develop five renewable energy independent power projects (IPPs) in Saudi Arabia.

  Saudi Arabia's principal buyer, Saudi Power Procurement Company (SPPC), issued the prequalification request for the IPPs making up the sixth round of the kingdom's National Renewable Energy Programme (NREP) on 29 September.

  Firms that are understood to have submitted SOQs include international developers such as Japan's Marubeni and Jera; France's EDF Renewables, Engie and TotalEnergies Renewables; as well as Chinese and local utility developers.

  The projects, comprising four solar photovoltaic (PV) IPPs and one wind IPP, will have a total combined capacity of 4,500MW.

  The following schemes comprise the NREP's sixth round:

  • 1,500MW Dawadmi wind IPP (Riyadh)
  • 1,400MW Najran solar PV IPP (Najran)
  • 600MW Samtah solar PV IPP (Jizan)
  • 600MW Al-Darb solar PV IPP (Jizan)
  • 400MW Al-Sufun solar PV IPP (Hail)

  SPPC is responsible for the pre-development, tendering and subsequent offtaking of the energy from the projects.

  US/India-based Synergy Consulting is providing financial advisory services to SPPC for the NREP sixth-round tender. Germany's Fichtner Consulting and US-headquartered CMS are providing technical and legal consultancy services, respectively.

  SPPC revealed the following lowest and second-lowest bidders for the contracts to develop four solar PV projects under the fourth round of the NREP on 21 October.

  2,000MW Al-Sadawi solar IPP (Eastern Province)

  • L1: Abu Dhabi Future Energy (UAE)/Korea Electric Power Corporation (Kepco, South Korea)/GD Power Development (China): $c1.29 a kilowatt-hour (kWh)
  • L2: SPIC Huanghe Hydropower Development (China)/EDF Renewables (France): $c1.31/kWh

  Al-Masaa solar IPP (Hail): 1,000MW

  • L1: SPIC/EDF Renewables (France): $c1.36/kWh
  • L2: AlJomaih Energy & Water (local) / TotalEnergies Renewables (France): $c1.40/kWh

  Al-Hinakiyah 2 solar IPP (Medina): 400MW

  • L1: SPIC/EDF: $c1.51/kWh
  • L2: Masdar/Kepco/Nesma: $c1.57/kWh

  Rabigh 2 solar IPP (Mecca): 300MW

  • L1: AlJomaih Energy & Water / TotalEnergies Renewables: $c1.78/kWh
  • L2: Masdar/Kepco/Nesma: $c1.89/kWh

  MEED previously reported that SPPC plans to award the NREP round-five contract before the end of the year.

  Photo: Pixabay

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  Jennifer Aguinaldo