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Adnoc awards $1.34bn Estidama project contracts

3 July 2023

 

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Adnoc Gas, the natural gas processing business of Abu Dhabi National Oil Company (Adnoc Group), has awarded contracts for two key packages of its project to upgrade its sales gas pipeline network across the UAE.

The total value of the two engineering, procurement and construction (EPC) contracts for the project, also known as Estidama, is estimated to be $1.34bn, Adnoc Group said in a statement on 3 July.

UK-headquartered Petrofac has been awarded the EPC contract for package 2 of the Estidama project. Package 2 is understood to be worth $720m, sources told MEED.

A consortium of Abu Dhabi’s National Petroleum Construction Company (NPCC) and Lebanon-headquartered CAT Group has won Estidama package 3, which is valued at approximately $630m, according to sources.

The new pipeline will extend Adnoc Gas’ existing 3,200-kilometre pipeline network to over 3,500km, enabling the transportation of higher volumes of natural gas to customers in the Northern Emirates of the UAE.

“This strategic pipeline extension will drive further growth for Adnoc Gas as it continues to supply sustainable gas supplies in the UAE in support of the company’s strategy to increase its market share and enhance its customer base,” Adnoc said in its statement.

Over 70 per cent of the contracts’ value is expected to flow back into the UAE economy under Adnoc Group’s In-Country Value (ICV) localisation scheme, Adnoc added.

Key Estidama packages

Adnoc Gas Processing, now part of Adnoc Gas, initially intended to issue separate EPC tenders for packages 2 and 5. However, it tendered these as a combined job in June last year. Contractors submitted technical bids for these packages in August 2022.

Eventually, Adnoc Gas divided the scope of work on combined packages 2 and 5, MEED reported in February this year.

Following the revision of the scope of work, Estidama package 2 broadly involves building a new facility at the KP-30 location of the Habshan gas compressor plant (HGCP) and installing three variable frequency drive motor-driven compressors.

Adnoc Gas received technical proposals for Estidama package 2 on 24 February. Contractors submitted commercial bids by 27 March.

Along with Petrofac, the following contractors, among others, are understood to have submitted commercial bids for Estidama package 2:

Package 5 is expected to be tendered separately to contractors as part of a planned second phase of the sales gas pipeline upgrade project.

ALSO READ: Gas takes centre stage in Adnoc downstream expansion

Adnoc Gas issued the main tender for Estidama package 3 in late June last year.

Contractors submitted technical bids for the package in August 2022, while commercial bids were submitted by 21 November.

MEED previously reported that Italy-headquartered Arkad was the lowest bidder for package 3, with a quotation of about $590m. A source close to the project said that following months of “intense negotiations, due diligence processes and evaluation of project delivery capabilities”, Adnoc Gas picked the consortium of NPCC and CAT for the package.

The scope of work on package 3 covers the installation of new gas pipelines from the Habshan complex to the HGCP, and from the HGCP to the Sweihan customer receipt, along with associated facilities.

Sales gas pipeline project packages

Erstwhile Adnoc Gas Processing, now consolidated into Adnoc Gas, initially divided the EPC work on its estimated $2bn sales gas pipeline network enhancement project into seven main packages.

China Petroleum Pipeline Engineering performed the Estidama project’s front-end engineering and design works as part of a contract worth about $6m that Adnoc Gas Processing awarded the Chinese state-owned firm in October 2020.

MEED reported in December 2021 that Abu Dhabi-based contractor Integrated Specialised General Contracting Company (Iscco) had won package 1, which is understood to have a contract value of $18m.

Iscco subcontracted the detailed engineering works on package 1 to the Abu Dhabi branch of Sweden-headquartered consultancy Rejlers.

Adnoc Gas issued the main tender for package 6 and packages 3 and 2+5 in late June last year.

Contractors also submitted technical bids for package 6 in August 2022 and commercial bids by 21 November.

Work on package 6 entails the installation of a 52-inch, 74km pipeline from Sweihan to Al-Shuwaib in Abu Dhabi and building two block valve stations.

Adnoc Gas combined the scope of work on packages 4 and 7, and issued the main tender in November last year.

Contractors submitted technical bids for combined package 4+7 by 27 March. The project operator is yet to call for commercial bids for this package.

The main scope of work on the Estidama combined package 4+7 involves laying a new pipeline from the Al-Shuwaib pig launcher and pig receiver station to the Sajaa gas facility in Sharjah.

The scope also covers building a new gas pipeline between BVS-2/KP28.7 in Abu Dhabi to Dubai’s Margham gas facility to meet increased gas demand from Adnoc Gas Processing’s customer Dubai Supply Authority (Dusup).

“Up to a dozen contractors are likely to have submitted technical bids for [combined package] 4+7,” one source said.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10980546/main.jpg
Indrajit Sen

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    The shareholders in JEC are Kingdom Holding Company with a 40 per cent stake, Bakhsh Group with a 40 per cent stake, and Sharbatly Group with a 20 per cent share.

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    The 170-storey Jeddah Tower will have a variety of revenue streams and will
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    MEED's October 2023 special report on Saudi Arabia includes: 

    > POLITICS: Saudi Arabia looks both east and west
    > SPORT: Saudi Arabia’s football vision goes global
    > ECONOMY: Riyadh prioritises stability over headline growth
    > BANKS: Saudi banks track more modest growth path
    > UPSTREAM: Aramco focuses on upstream capacity building
    > DOWNSTREAM: Saudi chemical and downstream projects in motion
    > POWER: Riyadh rides power projects surge
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    > GIGAPROJECTS: Gigaproject activity enters full swing
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    Colin Foreman
  • Saudi Arabia’s football vision goes global

    27 September 2023

    MEED's October 2023 special report on Saudi Arabia also includes: 

    > POLITICS: Saudi Arabia looks both east and west
    > GIGAPROJECTS: Gigaproject activity enters full swing
    > TRANSPORT: Infrastructure projects support Riyadh’s logistics ambitions
    > UPSTREAM: Aramco focuses on upstream capacity building
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    > POWER: Riyadh rides power projects surge
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    There are also signs that the British football boom, which began after the English premiership was created in 1992, is coming to an end. Top clubs enjoyed a windfall from satellite television rights and then the influx of investment from wealthy individuals, starting with Russia’s Roman Abramovitch 10 years later. This has now been overshadowed by the financial might of Abu Dhabi and Saudi Arabia in England and by Qatar, owner of Paris Saint Germain since 2011, in France.

    But the appetite among even the wealthiest investors for football assets may be fading. Earlier this year, Manchester United’s owners rejected an offer for the club from Qatar as inadequate.

    Sports Saudisation

    Saudi Arabia’s new approach is different. Instead of sending money overseas, it is looking to invest heavily in football within the kingdom. In the 2023 summer transfer season, Saudi Pro League clubs spent a net $907m on players, more than all of the Big Five leagues but the Premier League, which spent $1.39bn.

    The economic benefits are easily comprehended. PIF finance would go into building domestic stadiums and training facilities. Money paid to players and support staff would be retained in the kingdom. In addition to a domestic audience of football fans, Saudi Arabia has international airports and an aviation network to bring in fans from across the globe.

    Establishing the Saudi Pro League as one of the best will enhance the kingdom’s desire for a say at the highest levels of global club football. 

    European football’s perilous financial position is why plans for a European Super League comprising 12 teams, announced in the spring of 2021, initially attracted support from the clubs involved. It was scrapped at the last minute, but dreams of a super league – and the problems that inspired it – remain. It is conceivable that the kingdom could argue a case for membership should it be revived, though that is a consideration for the future.

    In the meantime, Saudi Arabia’s impact on football is already being felt. Last December, Portugal’s Cristiano Ronaldo signed for Riyadh’s Al-Nassr. Other top players that have since signed to play in the kingdom include Brazil’s Neymar, Ballon d’Or holder Karim Benzema, African Footballer of the Year Sadio Mane, World Cup winner N’Golo Kante and former Liverpool captain Jordan Henderson.

    In July, Kylian Mbappe turned down an offer from Riyadh’s Al-Hilal worth almost €300m ($321.5m) and a salary of €200m for a one-season stay. But – in what would be a coup for the Saudi league if it is accepted – a world-record signing fee is reported to have been offered by Al-Ittihad in September for Egypt’s Mohamed Saleh.

    Newcastle United could fit into the kingdom’s broader football plan as a source of talent that can be sold to the Saudi league to bring money into the English club while avoiding the fair play charges encumbering Manchester City. The first example of the process may have been Allan Saint Maximim, who was transferred to Al-Ahli for a reported transfer fee of almost $30m in July.

    Last summer, Riyadh also launched what is now the Liv Golf League. There has also been talk of it buying a US National Football League club. The kingdom is investing in other sports as well, but it is football that it is bringing home this autumn.

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    Edmund O’Sullivan