meed-logo

line1 line2 line3
SIGN IN / REGISTER

Offshore oil and gas sees steady capex

6 March 2025

 

This package also includes: Saudi Arabia to retain upstream dominance

With nearly half of the Middle East and North Africa’s (Mena) hydrocarbons reserves located in offshore basins, regional oil and gas producers spend significantly on maintaining and ramping up production levels. Offshore projects are predominantly geared at raising drilling capabilities, expanding subsea infrastructure and building floating production systems.

In addition to boosting production capacity, producers also invest in offshore projects to improve technological innovation, safety and environmental sustainability. 

Capital expenditure (capex) on offshore projects in the region has remained steady in the past 10 years, with 2024 being one of the best years on record, witnessing total project spending of $23.5bn.

Qatar’s offshore goals

Qatar accounted for the largest capex on offshore oil and gas projects in Mena last year, according to data from regional projects tracker MEED Projects. The country invested more than $12bn in projects to produce incremental volumes of gas from its North Field reserve, as well to sustain its crude output.

In January 2024, North Oil Company awarded $6bn-worth of engineering, procurement and construction (EPC) contracts for a third capacity expansion project at the Al-Shaheen offshore field, to boost oil production by about 100,000 barrels a day (b/d).

North Oil Company – a joint venture of state enterprise QatarEnergy (70%) and France’s TotalEnergies (30%) – has been operating the Al-Shaheen field since July 2017. Situated 80 kilometres (km) north of Ras Laffan, at a water depth of 60 metres, Al-Shaheen holds one of the biggest oil reserves in the world and is Qatar’s largest field. It has a production potential of 300,000 b/d and accounts for about 45% of the country’s total oil production.

Meanwhile, Qatar’s North Field liquefied natural gas (LNG) expansion requires state enterprise QatarEnergy to pump large volumes of gas from the North Field offshore reserve to feed the three phases of the $30bn-plus programme. QatarEnergy has invested billions of dollars in EPC works on the two phases of the North Field Production Sustainability (NFPS) project, which aims to maintain steady gas feedstock for the North Field LNG expansion phases.

QatarEnergy LNG, a subsidiary of QatarEnergy, awarded Italy’s Saipem an order valued at $4bn for combined packages Comp3A and Comp3B of the NFPS Offshore Compression Programme’s second phase in September last year. The scope of work on the packages encompasses the engineering, procurement, construction and installation (EPCI) of six platforms, approximately 100km of 28-inch- and 24-inch-diameter corrosion-resistant alloy rigid subsea pipelines, 100km of subsea composite cables, 150km of fibre optic cables and several other subsea units.

The job for combined packages Comp3A and Comp3B is Saipem’s latest contract award as part of the NFPS scheme. The Italian contractor has secured work totalling almost $6bn on the two phases of the project.

UAE pushes offshore

With Abu Dhabi National Oil Company (Adnoc Group) striving to attain an oil production capacity of 5 million b/d by 2027 and become self-sufficient in gas production by the end of this decade, offshore oil and gas projects have received a significant boost. Adnoc was the second-highest spender on offshore projects in the region last year, as well as in the past 10 years. 

In 2024, Adnoc Group subsidiary Adnoc Offshore spent about $6bn on major programmes to potentially increase oil production, such as the two phases of a project to raise output from the Upper Zakum offshore concession in Abu Dhabi to 1.2 million b/d.

In April last year, Adnoc Offshore awarded the project’s main EPC contract – known as UZ 1.2MMBD EPC-1 and worth $825m – to UAE-based Target Engineering Construction Company. In November, Target also won the contract for the project’s next phase, known as UZ 1.2MMBD EPC-2, which is understood to be valued at $500m.

Also last year, Adnoc Offshore awarded a 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 won the main contract for the Umm Shaif Accelerated Development project, which aims to increase the Umm Shaif oil field’s output from about 275,000 b/d to 390,000 b/d by 2027, and to sustain that level of production until at least 2036.

Aramco maintains capex

In January 2024, the Saudi Energy Ministry directed Saudi Aramco to abandon its campaign to expand its oil production spare capacity from 12 million b/d to 13 million b/d by 2027. As a consequence of that government decision, Aramco cancelled the tendering process for at least 15 schemes involving the EPCI of structures at offshore oil and gas fields. 

Aramco has since changed tack, spending an estimated $5bn in 2024 on offshore EPCI contracts and earning third place in the league table of highest offshore spenders in the Mena region last year. 

Saipem was the biggest beneficiary of Aramco’s offshore spending, winning five of the eight Contracts Release and Purchase Orders (CRPOs) awarded last year.

In May, Aramco awarded Saipem the contract for CRPO 143, which involves replacing an oil line between the Berri and Manifa oil fields in the kingdom’s Gulf waters.

Aramco then awarded Saipem the contract for CRPO 138, which involves laying a trunkline at the Abu Safah offshore field. The contract is estimated to be worth $500m.

The Milan-listed contractor then scooped three CRPOs in August, starting with CRPOs 132 and 139, the combined value of which is estimated to be about $1bn. In September, Saipem began work on the two contracts, which involve the EPCI of structures to upgrade the Marjan, Zuluf and Safaniya offshore field developments.

Just days after the award of CRPOs 132 and 139, Aramco awarded Saipem CRPO 127, a $2bn contract that involves the EPCI of topsides and jackets for wellhead platforms, a tie-in platform jacket and topside, rigid flowlines, submarine composite cables and fibre optic cables at the Marjan oil and gas field.

In late November, Aramco awarded three further CRPOs worth more than $500m. China Offshore Oil Engineering Company won CRPOs 149 and 152, which are estimated to be valued at $30m and $250m-$300m, respectively. UK-based Subsea7 secured CRPO 153, which is understood to be valued at $200m-$250m.

Positive outlook

Regional national oil companies, particularly those in the Gulf, will seek to maintain a steady stream of investment in offshore projects this year, capitalising on the favourable oil price environment in pursuit of their goal of ramping up output potential in the mid to long term.

Their international counterparts are also likely to press ahead with projects to derive maximum value out of their offshore hydrocarbons assets in the Mena region, a large portion of which are located in prolific, shallow-water formations, making the production of oil and gas more cost-effective than in other regions.

Capex on offshore oil and gas projects this year may well match the level seen in 2024, according to MEED Projects data. In the first two months of 2025, offshore EPC contract awards reached $7.5bn.

Adnoc Offshore accounts for that entire spend through its Lower Zakum Long-Term Development Plan (LTDP-1) project. The company’s long-term objective is to raise output capacity at the Lower Zakum offshore hydrocarbons concession in Abu Dhabi to 520,000 b/d by 2027 and maintain that level until 2034.

Spanish contractor Tecnicas Reunidas and Abu Dhabi-based contractors NMDC Energy and Target Engineering Construction Company have been selceted by Adnoc Offshore to execute EPC works on the three main packages of the Lower Zakum LTDP-1 project.

Separately, Aramco is in the bid evaluation and tendering stages with a total of 12 more CRPOs. The biggest of these offshore tenders are a set of four CRPOs – numbers 145, 146, 147 and 148 – that are part of a project to further expand the Zuluf offshore field development.

These four CRPOs, estimated to be worth about $5.8bn, involve the EPCI of several structures at the Zuluf field, to maintain and raise its long-term oil and gas production potential.

In addition to CRPOs 145, 146, 147 and 148, entities in Saudi Aramco’s Long-Term Agreement (LTA) pool of offshore contractors submitted bids last year for CRPO 150 – an estimated $50m tender that involves the installation of structures at Aramco’s Northern Area Oil Operations.

In December, Aramco issued seven more CRPOs – 154, 155, 156, 157, 158, 159 and 160 – for which its LTA contractors are in the process of preparing bids. Work on these tenders relates to EPCI on structures at several offshore oil and gas fields in Saudi Arabia.

Aramco has been the biggest spender on offshore oil and gas projects in the region in the past 10 years, with capex exceeding $48.5bn. The world’s largest company is predicted to spend significantly on offshore EPC projects in 2025, too.

Saudi Arabia to retain upstream dominance

https://image.digitalinsightresearch.in/uploads/NewsArticle/13451668/main.gif
Indrajit Sen

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Scatec and Egypt Aluminium seal $650m deal

    14 March 2025

    Oslo-headquartered renewable energy developer and investor Scatec has signed a 25-year US dollar-denominated corporate power-purchase agreement with Egypt Aluminium for a 1.1GW solar photovoltaic (PPV) plus 100MW/200MWh battery energy storage system (bess) plant project in Egypt.

    According to Scatec, the PPA is backed by a sovereign guarantee.

    The estimated total capital expenditure for the solar PV plus bess project is approximately $650m, which will be funded by approximately 80% non-recourse project debt,and the remainder, by equity from Scatec and partners.

    Scatec owns 100% of the project but is targeting to reduce its long-term economic interest by inviting additional equity partners, the firm said.

    Scatec will be the designated engineering, procurement and construction (EPC )service provider, with an EPC share of approximately 90% of total capex. It will also act as asset manager and operations and maintenance service provider for the project.

    It said the key next steps for the project are to work with the relevant authorities to allocate land, finalise grid connection and secure financing,

    Scatec said it aims to reach financial close and start construction within the next 12 months.

    Egypt Aluminium is the largest aluminium producer and industrial electricity consumer in Egypt and exports approximately 60% of its production to Europe.

    The solar PV plus bess project will be instrumental for Egypt Aluminium’s ambition to decarbonise its aluminium production and to meet the EU’s Carbon Border Adjustment Mechanism (CBAM) requirements which will be introduced in 2026, Scatec added.

    The project was first announced in January last year, when Egypt's Public Business Sector Ministry and Scatec were reported to be exploring the development of a solar power plant to supply clean energy for the operation of the Nagaa Hammadi aluminium complex in Egypt.

    The "groundbreaking" project is the first utility-scale PPA with an industrial offtaker in Egypt, said Scatec CEO Terje Pilskog.

    Growing projects pipeline

    It is the latest project in Egypt for Scatec, which withdrew in 2023 from two solar photovoltaic projects in Iraq and a green hydrogen project in Oman to focus its resources on developing projects in the North African territory.

    Scatec is the lead developer for the Egypt Green hydrogen project, which was first announced in 2021. Scatec, Abu Dhabi's Fertiglobe and the local Orascom Construction are developing the project in partnership with The Sovereign Fund of Egypt and the Egyptian Electricity Transmission Company.

    In July 2023, Scatec signed an agreement with Egypt's New & Renewable Energy Authority (NREA) to secure land for a planned 5,000MW wind farm in western Sohag.

    In September last year,  Scatec signed a US-dollar-denominated 25-year PPA with the Egyptian Electricity Transmission Company for a 1,000MW solar and 100MW/200MWh battery storage hybrid project in Egypt.

    Photo credit: Scatec

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13491318/main.jpg
    Jennifer Aguinaldo
  • JLL wins Pure Data Centres contract

    14 March 2025

    London-headquartered Pure Data Centres Group (Pure DC) has appointed Jones Lang LaSalle (JLL) to provide integrated facilities management services at its new Yas Island data centre in Abu Dhabi.

    The initial phase of Pure DC's first facility in the UAE went live in late February. When fully complete, the data centre campus will provide 45MW of capability, JLL said in a statement.

    JLL’s scope of work includes ongoing maintenance and support for the Yas Island data centre’s low-voltage and high-voltage electrical systems, including its uninterruptible power supplies, switchgear and hydrotreated vegetable oil (HVO)-powered generators, as well as its hybrid air and liquid cooling systems.

    Related read: Region poised for huge investment in data centres

    JLL will also be responsible for network and ICT management, alongside delivering front-of-house facilities management services, such as cleaning and landscaping.

    The firm said the new project will "reinforce its reputation as a leading consultant and operator across existing and new hyperscale data centre locations within the Europe, the Middle East and Africa (Emea) region".

    JLL recently added three senior executives in its Emea team after identifying a 742MW hyperscale construction boom in the region, the firm added.

    Saudi joint venture

    In November last year, Pure DC and the local  announced a joint venture to develop hyperscale data centres in Saudi Arabia.

    They said the joint venture plans to develop multiple 100MW-capacity data centre campuses in th kingdom to meet growing local and international customer demand.

    Founded in 2021 in London, Pure DC is majority-owned by funds of US-based Oaktree Capital Management, which have committed significant equity to fund the firm's global development pipeline.

    According to Pure DC's website, it has over 200MW of IT capacity live or under development in markets across Europe, Asia and the GCC.

    Aspiring AI hubs

    The UAE has the highest concentration of data centres, while Saudi Arabia is the fastest-growing regional market, with both countries, along with Qatar, aiming to be digital hubs and key players in AI.

    Globally, total investment in data centres reached $70.6bn in 2024 and is projected to grow by 5% to $74.3bn in 2025, according to GlobalData.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13491266/main.jpg
    Jennifer Aguinaldo
  • Abu Dhabi extends battery storage bid deadline

    14 March 2025

    Prequalified bidders were given a three-week extension to submit their proposals for a contract to develop and operate a battery energy storage system (bess) plant project in Abu Dhabi.

    The project client, Abu Dhabi-based utility offtaker Emirates Water & Electricity Company (Ewec), expects to receive bids by 24 March, three weeks from the previous tender closing date, according to a source familiar with the project.

    Called Bess 1, the 400MW project will closely follow the model of Abu Dhabi’s independent power project (IPP) programme, in which developers enter into a long-term energy storage agreement (ESA) with Ewec as the sole procurer.

    The first plant will be in Al-Bihouth, about 45 kilometres (km) southwest of Abu Dhabi, and the second plant will be in Madinat Zayed, about 160km southwest of the city.

    Ewec issued the request for proposals to prequalified companies in July last year and initially set 30 November 2024 as the last day to submit proposals. 

    MEED previously reported that up to four consortiums comprising infrastructure investors, developers and contractors have been formed and are preparing to submit their proposals for the contract.

    Ewec prequalified 11 managing partners that can bid either individually or as part of a consortium with other prequalified bidders. These are:

    • Acwa Power (Saudi Arabia)
    • China Electrical Equipment International (China)
    • EDF (France)
    • International Power (Engie)
    • Jera (Japan)
    • Jinko Power (China)
    • Korea Electric Power Corporation (Kepco, South Korea)
    • Marubeni (Japan)
    • Sembcorp Utilities (Singapore)
    • SPIC Huanghe Hydropower Development Company (China) 
    • Sumitomo Corporation (Japan)

    Ewec prequalified 18 other companies that can bid as part of a consortium. These are:

    • Abrdn Investcorp Infrastructure Investments Manager (UK)
    • AGP Capital (US)
    • Al-Masaood (UAE)
    • Al-Fanar Company (Saudi Arabia)
    • Alghanim International (Kuwait)
    • Aljomaih Energy & Water Company (Jenwa, Saudi Arabia)
    • Amplex-Emirates (local)
    • ATGC Transport & General Trading (local)
    • Amea Power (local)
    • China Electric Power Equipment & Technology (China)
    • China Machinery Engineering Corporation (China)
    • GE Capital EFS Financing (US)
    • Itochu (Japan)
    • Korea Western Power Company (Kowepo, South Korea)
    • Pacific Green (US)
    • Samsung C&T (South Korea)
    • Swift Energy (Malaysia)
    • X-Noor Energy Equipment Trading  (UAE)

    The planned facility is expected to provide up to 800 megawatt-hours (MWh) of storage capacity.

    The ESA will be for 15 years, commencing on the project’s commercial operation date, which falls in the third quarter of 2026. 

    According to Ewec, the bess project will provide additional flexibility to the system and ancillary services such as frequency response and voltage regulation.

    Global bess market

    The overall capacity of deployed bess globally is expected to reach 127GW by 2027, up from an estimated cumulative deployment of 36.7GW at the end of 2023, according to a recent GlobalData report.

    The report named Chinese companies BYD and CATL and South Korean companies LG Energy Solutions and Samsung SDI among the top battery technology providers globally.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13484751/main.gif
    Jennifer Aguinaldo
  • Indian and Spanish team wins Ras Mohaisen EPC package

    13 March 2025

    A team of India's Larsen & Toubro (L&T) and Madrid-headquartered Lantania has won the engineering, procurement and construction (EPC) contract for the Ras Mohaisen independent water project (IWP) in Saudi Arabia.

    State utility offtaker Saudi Water Partnership Company (SWPC) signed the water-purchase agreement contract for the project with a consortium comprising Riyadh-headquartered utility developer Acwa Power, Hajj Abdullah Ali Reza & Partners and Al-Kifah Holding Company in February. 

    According to L&T,  its Water and Effluent Treatment business division will execute the EPC contract for the desalination facility.

    The state water offtaker received two bids for the contract in April last year. The other bidder was Spain’s Acciona.

    The Ras Mohaisen IWP will be able to treat 300,000 cubic metres of seawater a day (cm/d) using reverse osmosis technology.

    It will also include storage tanks with a capacity of 600,000 cubic metres, equivalent to two operating days, intake and outfall facilities, process units and pumping stations.

    The build, own and operate project will also include electrical, automation and instrumentation systems and a solar photovoltaic plant. 

    The project is expected to reach commercial operation by the second quarter of 2028.

    The plant will be located in Al-Qunfudhah Governorate, about 300 kilometres south of Mecca, on the Red Sea coast in Saudi Arabia’s Western Region.

    The project is expected to enhance water supply chains and is intended to serve the Mecca and Al-Baha regions.

    Netherlands-headquartered KPMG acted as SWPC’s financial adviser, with UK-based Eversheds Sutherland acting as the legal adviser for the project.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13485233/main.gif
    Jennifer Aguinaldo
  • Egypt faces complex economic reality

    13 March 2025

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13483136/main.gif
    MEED Editorial