Abu Dhabi Company for Onshore Oil Development has awarded another contract in its US$5.3 billion drive to boost output.
ADCO confirms Bab deal
Abu Dhabi Company for Onshore Oil Development (ADCO), which pumps roughly half of the emirate's oil, has awarded another contract in its US$5.3 billion (Dh19.46bn) drive to boost output capacity by 14 per cent within three years. The company today confirmed a report that it had awarded a $700 million engineering and construction contract to the Abu Dhabi Government-controlled National Petroleum Construction to develop the giant Bab oilfield, which contains more than 500 million barrels of proved oil reserves. The contract is one of two that Abdul Munim al Kindy, the general manager of ADCO, recently said would be signed by the end of next week. Bab is one of Abu Dhabi's biggest onshore oilfields, and in 1958 was among the first to be discovered in the emirate. The American Association of Petroleum Geologists has estimated that more than 10 billion barrels of oil and 29 trillion cubic feet of gas may ultimately be recovered from the field, as advancing oil extraction technology and further drilling establish additional reserves. For Abu Dhabi oilfields, that potential is second only to the US association's estimate of more than 17 billion barrels of oil and 12 trillion cu ft of gas ultimately recoverable from the Zakum field in the Gulf. The estimates include past production. Recently, ADCO has pumped about 300,000 barrels per day (bpd) of oil from Bab, which has output capacity of roughly 420,000 bpd. The 60 per cent-owned operating unit of Abu Dhabi National Oil Company (ADNOC) is thought to have more than 10 billion barrels of proved oil reserves spread over 10,000 square kilometres, an area almost the size of Lebanon. That represents about 10 per cent of the UAE's total 97 billion barrels of oil reserves, about 94 per cent of which are in Abu Dhabi's territory, mostly in offshore fields. ADCO last year awarded $3.5bn of contracts under a programme to raise the emirate's onshore oil production capacity by 400,000 bpd to 1.8 million bpd by 2017. The first phase of the programme, aiming for more than half the target increase by 2012, would involve another $1.8bn, including the Bab contract. Mr al Kindy said last week that the phase one development plan included boosting output from Bab and several smaller oilfields. Today, he denied a recent report citing industry sources that ADCO had awarded a $300m deal to Veco Engineering, a subsidiary of the US engineering firm CH2M Hill, to oversee the development of the Bida al Qemzan field under an engineering, procurement and construction (EPC) contract. "Bida al Qemzan is a small field that may not lend itself well to an EPC-type contract," he said. "Objectives may be achieved using a different strategy." The "full scope" of development at the oilfield would, however, require about $300m of investment, Mr al Kindy confirmed. MEED, the London-based Middle East business intelligence newsletter, has suggested that another deal with National Petroleum could be imminent. Last month, it said National Petroleum had received a letter of intent for two EPC contracts totalling $1.5bn covering the construction and refurbishment of oil production facilities at ADCO's Bab and Qusawirah fields. ADCO's programme is part of ADNOC's broader plan to expand Abu Dhabi's total oil production capacity to 3.5 million bpd by 2018 from an estimated 2.8 million bpd currently. The ADNOC unit's other shareholders are the oil majors BP, ExxonMobil, Royal Dutch Shell and Total, each with a 9.5 per cent stake, and Portugal's Partex with 2 per cent. National Petroleum is 70 per cent owned by the Abu Dhabi's General Holding Corporation and 30 per cent by the Greek firm Consolidated Contractors. email@example.com