Adnoc awards three framework agreements valued at $4 billion

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Adnoc Drilling awarded largest scope of the framework agreements.

Abu Dhabi National Oil Company (Adnoc) announced on Tuesday, the award of three framework agreements valued at $4 billion (Dhs14.68 billion) for integrated drilling fluids services (IDFS) to support the ongoing expansion of its lower cost and lower-carbon intensive production capacity as it responds to growing global demand for energy.

The awards, the largest of their kind in the industry, were awarded to Adnoc Drilling Company (Adnoc Drilling), Schlumberger Middle East (SLB) and Halliburton Worldwide Limited Abu Dhabi (Halliburton). They cover Adnoc’s onshore and offshore fields and will run for five years with an option for a further two years.

Over 80 per cent of the award value could flow back into the UAE’s economy under Adnoc’s In-Country Value (ICV) programme over the duration of the agreements. Furthermore, the contractors will create job opportunities for UAE Nationals and invest in local manufacturing of equipment and chemicals required for the IDFS.

Yaser Saeed Almazrouei, Adnoc Upstream Executive Director, said: “These record framework agreements for integrated drilling fluids services continue Adnoc’s significant investment in drilling-related services to enable the expansion of our production capacity and responsibly unlock the UAE’s leading low-cost, lower-carbon intensity hydrocarbons. In line with the wise directives of the UAE’s leadership, we are prioritising in-country value as we respond to growing global demand for energy and these agreeements will create skilled job opportunities for UAE Nationals in the private sector, drive domestic manufacturing and support the UAE’s industrial growth.”

The framework agreements will enable investment in local manufacturing of equipment and facilities, including in Liquid Mud Plants and a Waste Management Facility, as well as key commodity chemicals. This underscores Adnoc’s efforts to create long-term opportunities in the UAE’s manufacturing sector and drive industrial growth.

Adnoc Drilling’s scope of the framework agreements is valued at up to $1.6 billion (AED5.87 billion). This reflects the company’s transformation and expansion of its service profile into a fully Integrated Drilling Services (IDS) company, following the development of its Oilfield Services division in partnership with Baker Hughes.

The framework agreements were awarded following a competitive tender process. They will enable hundreds of millions of dollars in cost savings through Adnoc’s optimised procurement approach that focuses on longer-term contracts with an optimal number of suppliers that can reliably deliver at competitive rates.

Since November 2021, Adnoc has awarded over $16 billion (Dhs58.72 billion) in agreements for drilling-related equipment and services, including these awards and other agreements for wellheads, downhole completion equipment, liner hangers, cementing service, wireline logging, directional drilling and logging while drilling. The average ICV of all of these awards combined amount to 70 per cent value flowing back ito the UAE economy, supporting manufacturing growth, employment and economic diversification.

IDFS are necessary to drill the wells that will enable Adnoc expand its oil production capacity and drive gas self-sufficiency for the UAE. Some of these services include provision of products, engineering, technical laboratory support, filtration equipment and solid control equipment.

Adnoc is a leading diversified energy and petrochemicals group wholly owned by the Emirate of Abu Dhabi. Adnoc’s objective is to maximise the value of the Emirate’s vast hydrocarbon reserves through responsible and sustainable exploration and production to support the United Arab Emirates’ economic growth and diversification.

Abu Dhabi National Oil Company (Adnoc) announced earlier that a new world record for the longest oil and gas well has been set at its Upper Zakum Concession.

Stretching 50,000 feet, the well is around 800 feet longer than the previous world record set in 2017 and supports Adnoc’s efforts to expand production capacity of its lower carbon oil and gas resources to help meet the world’s growing demand for energy. Adnoc Drilling drilled the oil and gas well from Umm Al Anbar, one of Adnoc Offshore’s artificial islands.

The extended reach wells will tap into an undeveloped part of the giant Upper Zakum reservoir with the potential to increase the field’s production capacity by 15,000 barrels of oil per day, without the need to expand or build any new infrastructure.

Abdulrahman Abdullah Al Seiari, Adnoc Drilling CEO, said, “This incredible achievement is in line with Adnoc Drilling’s quest to deliver increased efficiency for our customers as we continue to create greater value for our shareholders. The delivery of this record-breaking well also demonstates our commitment to lower operational costs, while enabling Adnoc to reach its oil and gas production capacity targets.

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