ADNOC awards $1.36bn Ghasha construction contract to UAE’s National Marine Dredging Company

ADNOC awards $1.36bn Ghasha construction contract to UAE’s National Marine Dredging Company
Published: 6 February 2019 - 8:30 a.m.
By: Carla Sertin

The Abu Dhabi National Oil Company (ADNOC) awarded a dredging, land reclamation and marine construction contract to build multiple artificial islands in the first phase of development of the Ghasha Concession. The contract was awarded to the UAE’s National Marine Dredging Company (NMDC), and is valued at $1.36 bn. ADNOC noted in a press release announcing the award that it would achieve substantial In-Country Value (ICV) of over 70%. The Ghasha Concession consists of the Hail, Ghasha, Dalma, Nasr and Mubarraz offshore sour gas fields.

Under the terms of the contract, NMDC will construct 10 new artificial islands and two causeways, as well as expand an existing island, Al Ghaf. The project is expected to take 38 months to complete and will provide the infrastructure required to further develop, drill and produce gas from the sour gas fields in the Ghasha Concession. At peak construction, the project is expected to employ over 3,500 people.

The award was signed by ADNOC Upstream Executive Director Abdulmunim Al Kindy, and Yasser Zaghloul, NMDC CEO, and was witnessed by UAE Minister of State and ADNOC Group CEO, His Excellency Dr. Sultan Ahmed Al Jaber, and His Excellency Mohammed Thani Murshed Al Rumaithi, Chairman of NMDC.

“This award accelerates the development of the Hail, Ghasha and Dalma sour gas offshore mega-project, which is an integral part of ADNOC’s 2030 smart growth strategy," Al Jaber said. "As one of the world’s largest sour gas projects it will make a significant contribution to the UAE’s objective to become gas self-sufficient and transition to a potential net gas exporter.

“NMDC was selected after a rigorous and competitive tender process. The award of this project to a UAE company will generate substantial In-Country Value, supporting local economic growth. In addition, it demonstrates the rapid progress ADNOC is making to leverage and create value from Abu Dhabi’s substantial, untapped, hydrocarbon resources.”

As part of the selection criteria for the contract, ADNOC considered the extent to which bidders would maximize ICV in the delivery of the project. This is a mechanism integrated with ADNOC’s tender evaluation process, with the aim of boosting the local energy supply chain and workforce. The successful bid by NMDC prioritized UAE sources for materials, as well as the use of mostly local suppliers, manufacturers and workforce, resulting in a total local spend of almost $1bn. NMDC will also work with international partners to deliver the project.

“We are proud of our partnership with ADNOC and to be awarded this exciting new mega-project," said H.E. Mohammed Al Rumaithi. "We are also very pleased at the contribution this project will make to the local UAE economy, to supporting ADNOC’s gas developments, and to progressing the UAE's strategy to develop the maritime sector, in order to compete globally.

“Enhancing In-Country Value is an important part of our work plan in the National Marine Dredging Company, as it is for ADNOC. We will achieve this by spending almost one billion dollars of the contract award in the UAE and creating additional employment opportunities for citizens in the maritime sector. We aim to increase the use of local resources, such as products, facilities and infrastructure in this sector of dredging equipment and services. NDMC will contribute to supporting the development and prosperity of the UAE.”

Artificial islands provide significant cost and environmental benefits, particularly in shallow water, by enabling the use of lower-cost land-drilling rigs instead of high-cost offshore jack-up drilling rigs. They also provide greater flexibility for extended reach drilling when compared to offshore rigs. The use of artificial islands will eliminate the need to dredge over 100 locations for wells and provide additional habitats for marine life. ADNOC has a proven record of developing artificial islands, including the construction of four artificial islands for the Upper Zakum expansion project. ADNOC’s Upper Zakum field is the second-largest offshore oil field and the fourth-largest oilfield in the world.

Her Excellency Dr. Shaikha Salem Al Dhaheri, Acting Secretary General of Environment Agency – Abu Dhabi also attended the signing ceremony and commented: “From the very early stages of exploration, ADNOC has worked in close partnership with the Environment Agency-Abu Dhabi (EAD) to ensure that this oil and gas development project, including artificial islands, is sustainable – both for the environment and the people. This included conducting one of the largest marine environmental baseline surveys in the UAE’s history in order to assess the marine life in the area, understand any potential impacts and ensure that the development and management plans protect the diverse marine ecosystems and mitigate any potential impact on the sensitive habitats and endangered species. We look forward to continuing this close collaboration with ADNOC and EAD as together we manage and develop Abu Dhabi’s natural resources sustainably and for the benefit of our nation.”

The names of the new islands in the Ghasha Concession were drawn from pearl diving sites in the area and reflect the culture of the region. They are Ghanem, Sawalem, Chananiz, Mudaifena, Reeah, Seebeh, Seemeh, Shalhah, Jzool and Duroob. The pearl diving tradition is tightly woven into the UAE culture and dates back around 7,000 years ago, long before oil was discovered in the country.

ADNOC recently awarded stakes in the Ghasha Concession to Italy’s Eni (25%), Germany’s Wintershall (10%) and Austria’s OMV (5%). The mega-project is expected to produce over 1.5bn cubic feet of gas per day when it comes on stream around the middle of the next decade, enough to provide electricity to more than two million homes. In addition, more than 120,000 barrels per day of oil and high-value condensates are expected to be produced.

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