x Abu Dhabi, UAEThursday 27 July 2017

Adnoc awards Dh34bn gas plant contracts

The company awards contracts totalling US$9.23bn for the emirate's centrepiece offshore gas development.

Abu Dhabi has put together the final pieces of its largest investment in natural gas, with commitments to invest more than US$20 billion (Dh73.4bn) in two projects to increase domestic fuel supply. The Abu Dhabi National Oil Company (ADNOC) said it would put Dh38 billion (US$10.3bn) into an offshore gas development, a week after it signed an estimated $10bn deal with ConocoPhillips, the big American oil company, to develop the technically difficult Shah field, south of Liwa. The two deals show the challenge the company faces in guaranteeing enough supply to meet rocketing demand for gas from power stations, heavy industry and the company's own oil operations. A decade ago, increases in gas production would have been considered a valuable export opportunity, but today these projects are focused on the domestic market. ADNOC will produce 1.4 billion cubic feet a day from the two projects but it will still struggle to meet growing demand, said Samuel Ciszuk, an analyst at IHS Global Insight. "The UAE needs to bring a lot of gas on-stream continuously," he said. In the latest contract awards announced on Wednesday night, Abu Dhabi Gas Industries (GASCO) and Abu Dhabi Gas Liquefaction (ADGAS), two ADNOC subsidiaries responsible for handling the bulk of the emirate's gas, will build three processing facilities to bring gas ashore from Umm Shaif, a -giant oil reservoir. The three facilities, at Das Island, Habshan and Ruwais, will transfer up to 1 billion cu ft a day of gas, which is expected to be pumped out of the field when oil production is increased. The Abu Dhabi Marine Operating Company (ADMA-OPCO), which is in charge of production at Umm Shaif, awarded another contract for a new offshore platform and pipeline for the field last month. The contracts will enable ADMA to raise its crude oil output and supply large quantities of gas to be used in other industries, ADNOC said. Because ADNOC has developed a strict policy against burning off or "flaring" surplus gas, it must find a place for the additional volumes generated by increased oil production. Traditionally, gas produced offshore was either reinjected into the reservoir or converted at Das Island into liquefied natural gas (LNG) for export to Asia via tanker. But the shortage of gas in the UAE that has emerged since 2000 has led ADNOC to shelve plans for an expansion of LNG production and instead direct volumes to the domestic market. The Integrated Gas Development (IGD), as the project is known, will process gas in a three-part chain that will start with a Dh3.67bn treatment plant on Das Island to be built by Hyundai Heavy Industries of Korea. Gas will then be piped to the most expensive link in the project, a Dh17.2bn gas gathering and processing centre at Habshan, in Al Gharbia, built by a consortium of Japan Gas Corporation and Tecnimont of Italy. The plant will strip out impurities and natural gas liquids, and will have a total capacity of 2 billion cu ft a day, to be fed both by the IGD and new gas produced from onshore oil expansions. ADNOC's gas is steadily becoming more "sour" or rich in hydrogen sulphide, as fields age, a company official said, and the new plant will allow it to treat gas with a much higher proportion of the toxic substance. About 900 million cu ft of marketable gas will be produced at Habshan each day, ADNOC said, plus 12,000 tonnes of valuable liquid hydrocarbons, and 5,000 tonnes of liquid sulphur. The chairman of Tecnimont, Fabrizio Di Amato, said it was the largest contract awarded to the group. Liquid hydrocarbons will in turn be piped to a Dh7.7bn processing plant at Ruwais, to be built by a consortium of GS Engineering of South Korea and Petrofac Emirates, a joint venture between the British company Petrofac and Mubadala Development, the government investment arm. Ethane produced at Ruwais will be shipped to ADNOC's petrochemical complex next door, while other products are to be exported.Smaller contracts for storage tanks and utilities were awarded to CB&I of the US, and Hyundai Heavy. cstanton@thenational.ae