Exxon yet to decide on Upper Zakum participation
27 November 2024
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The US-based international oil company (IOC) ExxonMobil has yet to reach a final agreement with its partners on its level of participation in the next phase of the Upper Zakum field expansion project in Abu Dhabi, according to Liam Mallon, the president of the company’s upstream business.
Mallon said that financial terms have been a key issue in determining ExxonMobil’s future participation in the project.
Speaking at a conference in London, he said: “The challenge was getting an appropriate reward for that significant investment … we’ve been working hard on that, and we will participate in some form in the extension of Upper Zakum.
“We are pleased to do that. Exactly when and how that might get talked about is yet to be determined – but we will participate.”
Asked when Exxon’s level of participation in the expansion project would be finalised, Mallon said: “I will leave that for others.”
Commenting on Exxon’s relationship with the UAE, he said it was an example of “multi-decade partnerships where we bring our technologies and our capabilities – drilling the world’s longest wells week after week”.
The Upper Zakum field holds the record for the world’s longest oil well.
This record currently stands at 53,500 feet, according to Mallon.
Work under way
Earlier this week, MEED revealed that Adnoc Offshore had begun work on the next expansion phase of the Upper Zakum field development in Abu Dhabi, which aims to increase the asset’s oil production potential to 1.5 million barrels a day (b/d).
The offshore oil and gas production business of Abu Dhabi National Oil Company (Adnoc Offshore) recently awarded a contract for pre-front-end engineering and design (pre-feed) and feed services on the project, known as UZ 1.5MMBD, to France-headquartered contractor Technip Energies.
A kick-off meeting between Adnoc Offshore and Technip Energies took place on 21 November.
Located 84 kilometres offshore in Abu Dhabi, Upper Zakum is the world’s second-largest offshore oil field and fourth-largest oil field.
The UZ 1.5MMBD project is the latest in a series of crude output expansion projects that Adnoc Offshore has undertaken at the Upper Zakum field development.
Upper Zakum expansion
The first phase of the programme to raise the Upper Zakum offshore field development’s oil production capacity to 1.2 million b/d was launched 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 b/d, with the project execution timeline eventually extended.
In April, MEED reported that Adnoc Offshore had awarded the main engineering, procurement and construction (EPC) contract for the UZ 1.2MMBD EPC-1 project to UAE-based Target Engineering Construction Company. The value of the EPC contract won by Target is estimated to be $825m.
The project’s main scope involves the EPC of several surface facilities and plants at the Upper Zakum offshore development’s four main artificial islands: Al-Ghallan, Umm Al-Anbar, Ettouk and Asseifiya – also known as Central Island, West Island, North Island and South Island, respectively.
Spanish contractor Tecnicas Reunidas won the contract for the feed works on the UZ 1.2MMBD EPC-1 project in 2019. UK-headquartered Wood Group was appointed as the project management consultant for the EPC phase.
Earlier in November, MEED reported that Adnoc Offshore had also selected Target Engineering Construction Company for the second phase of the Upper Zakum 1.2 million b/d project (UZ 1.2MMBD EPC-2). The value of the contract is estimated to be about $500m, according to sources.
The scope of work on the UZ 1.2MMBD EPC-2 project covers the EPC of several structures on Assefiya Island.
Adnoc Offshore performed the feed work on the UZ 1.2MMBD EPC-2 project in-house.
Upper Zakum oil production
Adnoc Offshore has committed to a total capital expenditure budget of approximately $30bn, along with its operating partners in the Upper Zakum hydrocarbons concession, Japan Oil Development Company (Jodco) and US-based ExxonMobil.
The strategic objective is to first raise the asset’s oil output from 640,000 b/d to 750,000 b/d through the UZ 750 project, then to 1.2 million b/d through the two phases of the ongoing UZ 1.2 MMBD project, and eventually to 1.5 million b/d.
Zakum Development Company (Zadco), which later merged into Adnoc Offshore, awarded EPC contracts for the UZ 750 project in 2012 and early 2013.
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