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Abu Dhabi, UAEWednesday 19 December 2018

Adnoc awards Spanish firm Dh5.1bn contract to expand oil field output

Tecnicas Reunidas will work to raise capacity of Bu Hasa by 18% to 650,000 barrels per day

Arthur Wallace Crossley, Tecnicas Reunidas chief executive, upstream, left signs the EPC agreement with Adnoc Onshore chief executive Yasser Saeed Al Mazrouei. Courtesy: Adnoc
Arthur Wallace Crossley, Tecnicas Reunidas chief executive, upstream, left signs the EPC agreement with Adnoc Onshore chief executive Yasser Saeed Al Mazrouei. Courtesy: Adnoc

Abu Dhabi National Oil Company awarded Tecnicas Reunidas of Spain a Dh5.1 billion contract to expand its Bu Hasa, the emirate's largest onshore field as part of plans to boost output to 5 million barrels per day by 2030.

The expansion will raise its crude output capacity from the field by 18 per cent to 650,000 bpd by 2020, the company said in a statement on Wednesday.

As per the terms of the engineering, procurement and construction contract, the Spanish company will execute the project within 39 months for operator Adnoc Onshore, a subsidiary of the state producer.

"This significant investment in the Bu Hasa field will enable production capacity to be increased and generate additional value,” said Dr Sultan Al Jaber, group chief executive at Adnoc.

"We are on track to meet our production capacity target of 3.5 million bpd by the end of this year – to 4 million bpd by the end of 2020."

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The UAE accounts for 4.2 per cent of global production of crude, most of it from fields owned and operated by Adnoc.

Abu Dhabi's Supreme Petroleum Council announced last week a spending package of Dh486bn, which would unlock the emirate’s sour gas caps and raise production capacity of crude to five million bpd by 2030 from about 3 million bpd currently. Adnoc announced earlier this month the discovery of one billion barrels of oil, one per cent increase of existing reserves.

Tecnicas Reunidas’ scope of work on the project includes revamp and expansion of facilities, new pipeline networks, production hubs and conversion of three trains at a central de-gassing station. The project would also include streamlining of water handling, implementation of a second gas lift recovery phase and improvement of overall production efficiency besides reduction of inactive wells, Adnoc said.

The contract is expected to create 60 per cent in-country value, equivalent to the generation of Dh3bn to the UAE economy, according to Adnoc upstream director Abdulmunim Al Kindy.

The Bu Hasa field, located 200km south of Abu Dhabi, is one of Adnoc’s oldest fields, where production began in 1965. It is operated by Adnoc Onshore, in which the state-owned company has a 60 per cent stake. Other partners include BP with 10 per cent, Total with 10 per cent, CNPC of China with 8 per cent, JODCO of Japan with 5 per cent, CEFC of China with 4 per cent, and GS Energy with 3 per cent.

The agreement was signed during the four-day Abu Dhabi International Petroleum Exhibition and Conference taking place in the capital this week.

The award is one several agreements inked between Adnoc and a host of companies ranging from Saudi Aramco, the world's biggest oil producing company to France's Total.

Adnoc is undertaking a transformation programme that aims to boost output of oil and gas, sell stakes in units in initial public offerings, partner with international oil companies on various projects and extract more value from its output.

It unveiled in May a Dh165bn plan to develop its downstream strategy by doubling refining and tripling petrochemical capacities at its industrial city of Ruwais with the help of foreign partners.

The downstream plans include the addition of a new 600,000 bpd refinery that will boost its total capacity to process crude and condensate to 1.5 million bpd, making it the largest such facility in the world.