Strategic Adnoc projects register notable progress
11 April 2023
This package on the UAE's upstream sector also includes:
> Adnoc tenders key unconventional gas project
> Adnoc advances strategic Lower Zakum projects
> Adnoc L&S wins $2.6bn logistics services contract
> Adnoc and BP offer to buy Israeli gas firm stake
> Adnoc starts Fujairah CO2 reduction project
> Adnoc receives bids for key Estidama project packages
> Adnoc tenders Upper Zakum oil field development
Abu Dhabi National Oil Company (Adnoc) is making considerable progress with big-ticket projects key to attaining its strategic goals of 5 million barrels a day (b/d) of oil production capacity by 2027 and 3 billion cubic feet a day (cf/d) of gas by the end of this decade.
The state energy giant has been allocated a capital expenditure budget of $150bn for 2023-27. It made clear its intention to advance strategic projects by deploying contractors at the start of the year to begin initial work on its biggest scheme – the Hail and Ghasha sour gas development.
Hail and Ghasha sour gas production
In January, Adnoc signed pre-construction services agreements (PCSAs) with France-headquartered Technip Energies, South Korean contractor Samsung Engineering and Italy’s Tecnimont for the Hail and Ghasha onshore package.
Italian contractor Saipem, Abu Dhabi’s National Petroleum Construction Company (NPCC) and state-owned China Petroleum Engineering & Construction Company (CPECC) secured a PCSA for the offshore package.
While the onshore and offshore PCSAs awarded to the two consortiums by Adnoc are valued at $80m and $60m, respectively, the engineering, procurement and construction (EPC) packages are estimated to be worth $5.5bn and $5bn.
As part of the PCSAs, the contractors are required to perform initial detailed engineering and procurement for important long-lead items. Based on proposals to be submitted later this year, Adnoc is expected to award the same contractors the main EPC works on the Hail and Ghasha project.
Production from the Ghasha concession, where the Hail and Ghasha fields are located, is expected to start by 2027, ramping up to more than 1.5 billion cf/d before the end of the decade.
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.
Fujairah LNG project
While contractors perform early works on the Hail and Ghasha packages, Adnoc is pursuing another critical project to position the UAE as a key player in the regional and global liquefied natural gas (LNG) sector.
Adnoc Group subsidiary Adnoc Gas has started an early engagement process with contractors for a planned LNG export terminal in the emirate of Fujairah. The estimated $4.5bn project will have the capacity to process approximately 9.6 million tonnes a year (t/y) of LNG, with the help of two 4.8 million t/y-capacity trains.
Two consortiums have formed to bid for the main EPC works on the Fujairah LNG project, the main tender for which is expected to be issued by Adnoc Gas during the second quarter:
- Technip Energies (France)/JGC Corporation (Japan)/National Petroleum Construction Company (UAE)
- McDermott (US)/Saipem (Italy)/Hyundai Engineering & Construction (South Korea)
The Fujairah facility is anticipated to be commissioned in 2027, and will ship LNG mainly to Pakistan, India and China, and other key markets in Asia such as Japan and South Korea.
Vital offshore projects advance
Increasing oil production from Abu Dhabi’s prolific offshore hydrocarbon concessions is crucial to achieving Adnoc's overall oil production target and sustaining crude output levels over the long term.
To this end, Adnoc Group subsidiary Adnoc Offshore is making headway with two significant projects to raise oil production from the Upper Zakum and Lower Zakum concessions.
Adnoc Offshore tendered the main EPC contract in late February for a project to increase the potential of Abu Dhabi’s largest oil-producing asset, the Upper Zakum offshore field, to 1.2 million b/d. Contractors are currently preparing technical bids for the project known as UZ1000.
The Upper Zakum oil field, located 84 kilometres offshore Abu Dhabi, is the world’s second-largest offshore oil field and the fourth-largest oil field.
The main scope of work on the UZ1000 project involves the EPC of multiple surface facilities and plants at the Upper Zakum offshore development’s four main artificial islands of Al-Ghallan, Umm al-Anbar, Ettouk and Asseifiya – also known as Central Island, West Island, North Island and South Island, respectively.
Separately, Adnoc Offshore is working to sustain oil production from the Lower Zakum asset at its current level of 450,000 b/d until 2025, and then increase output to 470,000 b/d. This target will be achieved through the Lower Zakum early production scheme 2 (EPS 2) and proved developed producing (PDP) project.
The larger, longer-term objective is to raise Lower Zakum’s oil production to 520,000 b/d by 2027 and maintain that level until 2034. This goal is to be accomplished through the first phase of the Lower Zakum Long-Term Development Plan (LTDP-1).
Adnoc Offshore is moving ahead with both the Lower Zakum EPS 2/PDP and LTDP-1 projects in parallel, and has started the early engagement process for the EPC work on both projects with contractors.
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It offered BD681,689 ($1.8m) for the contract to provide advisory services to the client for the project.
The other bidding team, headed by KPMG Fakhro, offered BD758,072 for the contract.
Bahrain’s Electricity & Water Authority (EWA) opened the technical bids for the consultancy contract in September 2022, as MEED reported.
The Al-Dur 3 IWPP is expected to consist of a combined-cycle gas turbine plant with a capacity of 1,500MW-1,800MW and a seawater desalination plant with a capacity of approximately 50 million imperial gallons a day (MIGD).
The power generation and water desalination plants are expected to produce early power and water in the summer of 2027, with full commercial operation in summer 2028.
Al-Dur 3 will be Bahrain’s fourth independent utility scheme.
Al-Dur 2
An earlier project, the Al-Dur 2 IWPP, started full operations in June last year.
EWA selected a team led by Saudi-based utilities developer Acwa Power to develop the project in 2018.
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Leading Mena banks give little ground in 2023
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The past year has seen significant upheavals in the ranking of the Middle East and North Africa (Mena) region’s largest listed banks due to a combination of market conditions, mergers, acquisitions and new listings, according to the 2023 MEED Top 100 companies list.
Weakening international investor sentiment amid higher interest rates, and concerns over the collapse of several US and Swiss banks, has perhaps been the most prominent factor in their performance.
In a trend largely independent of actual performance, which regional banks have generally improved in the 2022-23 fiscal year – both in terms of gross revenue and the bottom line – many banks have found their market values reduced, with banks in the MEED Top 100 companies list shedding more than $85bn in value.
Regional ranking
Despite this, Al-Rajhi Bank and Saudi National Bank, although temporarily diminished in overall market capitalisation, remain the top two banks in the region by value, as they were in 2022.
In third place now is QNB, having just edged ahead of First Abu Dhabi Bank in value terms. Fifth place is occupied by Kuwait Finance House, which has risen significantly in value over the past year through its full acquisition of Ahli United Bank in a share swap transaction, displacing Riyad Bank.
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Middle East equities hold largely steady
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The value of the top listed firms in the Middle East and North Africa (Mena) region held largely steady during the 2022-23 financial year as international investor sentiment wavered over the state of the global economy.
Viewed through the lens of the MEED Top 100, an annual ranking of the largest Mena-listed companies, the market capitalisation of the top 100 companies stands at $3.83tn, having edged up by a slight 1.6 per cent from the $3.77tn in MEED’s 2022 listing.
This almost static scenario contrasts with buoyant growth the previous year, when the region’s top stocks leapt in value by 23.4 per cent from only slightly above the $3bn mark amid higher oil prices and post-Covid growth optimism.
The relative stability of the list also belies some significant downward sliding in the value of oil and gas companies, amid lower oil price projections, and banks, amid higher interest rates and the global banking concerns following the crises at several US and Swiss institutions. The value of Saudi Aramco alone, which accounts for about 55 per cent of the list’s total value, dipped by more than $200bn.
Growth areas
The value loss has been balanced by growth in other areas, including telecommunications and real estate – the latter having been particularly supported by a strong recovery in the UAE property market. New entries have also been added to the list following a spree of high-value initial public offerings (IPOs) in 2022 and 2023.
Notwithstanding the overweighted presence of Saudi Aramco, the banking sector remains the largest contributor to the list, with 34 entities worth a combined $553bn.
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Port construction
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Jacobs is the main design consultant with Moffatt & Nichol, IGO and Trent as the main subconsultants.
Port operations
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Saudi Liebherr was awarded contracts for 10 mobile harbour cranes for SR200m.
ZPMC has been awarded contracts for 10 ship-to-shore gantry cranes, 30 electric rubber-tiered gantry cranes and six automated rail-mounted gantry cranes for over SR1bn. ZPMC will work with Siemens Europe to deliver the automation components.
An expanded Duba port is a critical component of Oxagon and the broader Neom development, as it will allow greater volumes of materials to be imported for the project. With an expected investment value of $500bn, Neom is the largest programme of construction work in the world.
Neom says the first container terminal will be operational by the beginning of 2025.
The management of Duba port was transferred from national maritime regulator Mawani to Neom in 2022.
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Dewa commissions Lusaily reservoir
30 May 2023
Dubai Electricity & Water Authority (Dewa) has announced that it has commissioned the third phase of its water reservoirs in the Lusaily area.
The project has a storage capacity of 60 million imperial gallons (MIG) and investments totalling AED157.4m ($42.9m).
Dewa says the project supports its efforts to enhance water security and keep pace with the increase in demand.
“We continue to strengthen our robust state-of-the-art infrastructure and adopt innovation and the latest tools for anticipating the future,” says Saeed Mohammed al-Tayer, managing director and CEO of Dewa.
“This supports the Dubai Integrated Water Resource Management Strategy 2030 and the UAE Water Security Strategy 2036. Our sound scientific planning has helped us keep pace with the growing demand for water in Dubai, according to the highest international standards.
“In 1992, Dewa’s production capacity of desalinated water was 65 million imperial gallons a day (MIGD). Today it has increased to 490MIGD,” he adds.
Dewa also confirmed its plans to commission other reservoirs in Dubai this year.
“In addition to the water reservoir in Lusaily, we are working on three other reservoir projects in Nakhali, Hassyan and Hatta. These are expected to be completed this year and next year. With the completion of these projects, the storage capacity will increase from 881MIG currently to 1,151MIG of desalinated water,” says Al-Tayer.
The local Ghantoot Gulf Contracting was awarded the contract to build the third phase of the Lusaily reservoir in 2018.
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