ADNOC awards $3.6bn procurement contracts for tubing and casing

ADNOC awards $3.6bn procurement contracts for tubing and casing
Published: 21 August 2019 - 1:15 p.m.
By: Carla Sertin

Abu Dhabi National Oil Company (ADNOC) has awarded contracts worth $3.6bn for the procurement of casing and tubing. The contracts were awarded to Consolidated Suppliers Establishment (for Tenaris S.A. products); Abu Dhabi Oilfield Services Company (for Vallourec S.A. products); and Habshan Trading Company (for Marubeni Corporation products).

Under the terms of the contracts, the three companies will supply a combined total of 1mn metric tons of casing and tubing – which by comparison is equivalent to the distance from Abu Dhabi to Houston – over five years, to support ADNOC’s drilling activities.

Abdulmunim Saif Al Kindy, ADNOC upstream executive director, said: “The award of contracts with a combined scope that is one of the world’s largest for tubing and casing follows a highly competitive bid process. It underscores ADNOC’s optimisation efforts to drive commerciality across our growing portfolio."

The award marks the first in a series of drilling-related procurement expenditures with an overall value of $15bn that ADNOC plans to make in the next five years. ADNOC says these deals could achieve In-Country Value of over 50% ($1.8bn). This includes more than $100mn in foreign direct investment, over the next five years, to establish a state-of-the-art oil country tubular goods (OCTG) threading plant and repair center, and a training academy in Abu Dhabi to enhance local expertise and generate value for the UAE.

“These agreements will provide ADNOC with increased flexibility to proactively respond to the demands of the evolving energy landscape as we ramp up our drilling activities and deliver our 2030 strategy," Al Kindy added. "They will also generate substantial In-Country Value and provide attractive foreign direct investment opportunities for the private sector, further demonstrating ADNOC’s commitment to creating sustainable value for the nation and its people, in line with the Leadership’s wise directives.”

The contract awards followed a robust tendering process that included a rigorous assessment of how much of the contract value would support the growth and diversification of the UAE’s economy through ADNOC’s In-Country Value Program, which is aimed at nurturing new local and international partnerships and business opportunities, catalyzing socio-economic growth and creating job opportunities for UAE nationals.

The combined scope of the awards is based on the forecasted requirement for casing and tubing across the ADNOC Group. The awards complement ADNOC’s substantial upstream growth plans and drive to deliver integrated drilling services as it plans to increase its conventional drilling by 40 percent% by 2025 and substantially ramp up the number of its unconventional wells. This is part of its target to achieve 4 million barrels of oil production capacity per day (mmbpd) by the end of 2020 and 5 mmbpd by 2030.

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