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Firms express interest in new Hail and Ghasha phase

22 May 2023

 

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Contractors have expressed interest in tendering for new engineering, procurement and construction (EPC) contracts for Abu Dhabi National Oil Company’s (Adnoc’s) multibillion-dollar Hail and Ghasha sour gas development.

Adnoc started a fresh EPC tendering round for the project on 29 April. Contractors were issued expression of interest (EoI) documents just days after the cancellation of the pre-construction services agreements (PCSAs) that had been awarded in January.

Firms were initially asked to express interest in the new EPC tendering round by 14 May. According to sources, the deadline was extended until 19 May and firms submitted EoIs by that date.

The new EoI document details Adnoc’s latest EPC execution strategy for the Hail and Ghasha development. Under these plans, the offshore and onshore scope of work has been divided into three packages:

  • Package one: Subsea pipelines, umbilicals, cables, risers and other offshore structures
  • Package two: Offshore drilling centre facilities, the Ghasha offshore processing plant and central living quarters
  • Package three: The Manayif onshore processing plant, including offsite export pipelines and tie-ins, utilities, the main control building and process buildings. Work on a Ruwais sulphur-handling terminal and other non-process buildings is an optional scope for this package.

An Adnoc spokesperson previously told MEED: “Adnoc and our international partners remain committed to delivering the gas mandated from the Ghasha concession. We do not comment on market speculation.”

PCSAs cancelled

The PCSAs signed in January with two consortiums, comprising three contractors each, marked the start of detailed engineering work and procurement of critical long-lead items for the offshore and onshore scope of work on the Hail and Ghasha development.

A consortium of France-headquartered Technip Energies, South Korean contractor Samsung Engineering and Italy’s Tecnimont was awarded the PCSA for the onshore package. The contractors revealed the value of the contract to be approximately $80m.

Italian contractor Saipem, Abu Dhabi’s National Petroleum Construction Company (NPCC) and state-owned China Petroleum Engineering & Construction Company (CPECC) won the PCSA for the offshore package, worth $60m.

Previously, the onshore work on the Hail and Ghasha scheme involved the construction of a gas process plant, pipeline network and new gas gathering units.

The offshore PCSA covered installing offshore platforms, gas compression facilities and more than 400 kilometres of subsea pipelines.

The reason for these PCSAs being annulled is unclear, but sources previously said the cost estimates submitted for the project were higher than the client’s overall budget.

Protracted project timeline

The cancelled PCSAs were part of an early engagement process with contractors that Adnoc started following the termination of at least two earlier bidding rounds.

US engineering firm Bechtel completed the project’s original front-end engineering and design (feed) in 2019, with tenders for four EPC packages issued soon after.

Following the submission of commercial bids in early 2021, Adnoc made revisions to the feed as part of an optimisation process started by Technip Energies in November 2021. The revised feed aimed to reduce the scheme’s overall capital expenditure, which was previously estimated to be as high as $15bn.

The four original EPC packages were consolidated into two integrated offshore and onshore packages, thought to be worth as much as $5bn and $5.5bn, respectively, based on the previous version of the project.

MEED reported in September last year that early engagement contractors had submitted proposals for the detailed engineering work on the Hail and Ghasha development. The January PCSAs are understood to have been issued based on these proposals.

Hail and Ghasha fields

The Hail and Ghasha fields, along with the Hair Dalma, Satah, Bu Haseer, Nasr, Sarb, Shuwaihat and Mubarraz fields, are located in Abu Dhabi’s offshore Ghasha concession.

Adnoc holds the majority 55 per cent stake in the Ghasha concession. The other stakeholders are Italian energy major Eni with 25 per cent, Germany’s Wintershall Dea with 10 per cent and Austria’s OMV and Russia’s Lukoil, each with 5 per cent.

Adnoc plans to produce more than 1.5 billion cubic feet a day of sour gas from the Ghasha concession by the middle of this decade. This target is aligned with the company’s broader goal of achieving gas self-sufficiency for the UAE by 2030.

In November 2021, Adnoc and its partners in the Ghasha concession awarded two EPC contracts for the Dalma offshore sour gas development project. Abu Dhabi’s NPCC and Spain-headquartered Tecnicas Reunidas won contracts worth $1.46bn to execute offshore and onshore EPC works on the Dalma project, respectively.

Four artificial islands have already been completed in the Ghasha concession, and development drilling is under way.

In addition, Adnoc awarded two contracts totalling $2bn to its subsidiary Adnoc Drilling in July last year for the Hail and Ghasha offshore sour gas field development project.

The awards comprise a $1.3bn contract for integrated drilling services and fluids, and a $711m contract to provide four island drilling units. Their duration is 10 years.

Adnoc also awarded a third contract, valued at $681m, to another subsidiary, Adnoc Logistics & Services, to provide offshore logistics and marine support services for the planned Hail and Ghasha development.

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Indrajit Sen

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