The Abu Dhabi National Oil Company (ADNOC) has set off record breaking contracts worth up to almost $6 billion (AED22 billion) to enable drilling growth as it boosts its crude oil production capacity to 5 million barrels per day (mmbpd) by 2030 and drives gas self-sufficiency for the United Arab Emirates (UAE). The announcement was made at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) and follows the recent successful listing of ADNOC Drilling on the Abu Dhabi Securities Exchange (ADX).

The investments are in the form of procurement awards to top-tier contractors for Wellheads and related components, Downhole Completion Equipment (DCE) and related services, and Liner Hangers and Cementing Accessories – all crucial in drilling for oil and gas and completing wells. 

Almost 60% of the total value of the awards could flow back into the UAE’s economy under ADNOC’s successful In-Country Value (ICV) program over the duration of the awards.
Furthermore, more than $900 million (AED3.3 billion) worth of wellheads and over $700 million (AED2.6 billion) worth of Downhole Completion Equipment will be manufactured in the UAE as well as all liner hangers. In addition, $185 million (AED679 million) in foreign direct investment (FDI) will flow into the UAE’s economy to establish two wellheads manufacturing and assembly facilities, enhance drilling-related equipment manufacturing and assembly, and enable local manufacturing of 20 new drilling completion products thereby strengthening the UAE’s drilling supply chain with vendor managed inventory. 

The huge ICV resulting from this mega award package directly supports the objectives of the UAE’s Principles of the 50 to develop human capital and accelerate the development of a dynamic economy.  

His Excellency Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology, and ADNOC Managing Director and Group CEO, said: “ADNOC’s world record investments in drilling-related equipment underlines our commitment to responsibly unlocking our world-scale hydrocarbon resources and expanding our production capacity to continue providing the world with some of the least carbon-intensive barrels for decades to come. The awards were secured at highly competitive rates, enabling substantial cost savings for ADNOC and underpinning our broader efforts to drive commerciality and value across our entire portfolio.

“Crucially, the awards will directly create more skilled employment opportunities for UAE Nationals, enhance domestic manufacturing and further stimulate the growth of the private sector and our local industrial base. This is yet another example of how ADNOC is working to support the growth and diversification of the UAE’s economy, in line with the Principles of the 50 and the Leadership’s wise directives.”

The procurement award for wellheads and related components is worth up to $3.27 billion (AED12 billion), making it the world’s largest in this category. Gulf Automation Services & Oilfield Supplies (GASOS), UAE agents for TechnipFMC, and Al Ghaith Oilfield Supplies & Services Company, UAE agents for Baker Hughes, secured the awards with both companies having an equal split of the scope which runs for 10 years. 

The procurement award for Downhole Completion Equipment and related services is worth up to $2.34 billion (AED8.6 billion), also making it the world’s largest in this category. Schlumberger Middle East S.A (Schlumberger) and Weatherford Bin Hamoodah Company L.L.C (Weatherford) secured the awards. Schlumberger’s scope is valued at up to $1.41 billion (AED5.18 billion) while Weatherford’s scope is valued at up to $931 million (AED3.42 billion). The award runs for five years with an option to extend for two years.

The procurement award for Liner Hangers and Cementing Accessories is worth up to $337 million (AED1.24 billion) and runs for five years with an option to extend for two years. 

The award for liner hangers was made to Weatherford Bin Hamoodah, UAE agents for Weatherford and Uni-Arab Engineering & Oilfield Service, UAE agents for Baker Hughes, while the award for Cementing Accessories was made to Al Ghaith Oilfield Supplies & Services Company Ltd, UAE agents for Downhole Products, Best Pick General Trading LLC, UAE agents for NeOz Energy, and Al Mansoori Specialized Engineering LLC, UAE agents for Sledgehammer.

The scope of the awards cut across the ADNOC Group and will provide ADNOC with a robust supply chain of drilling-related equipment to enable its requirement to drill thousands of new wells  as it expands its production capacity while maintaining its leading low-cost oil producer status.

The awards are expected to enable hundreds of millions of dollars in cost savings. As an integral part of its 2030 strategy, ADNOC is optimizing its procurement strategy to reflect market dynamics, focusing on long-term contracts with a reduced number of suppliers that provide stable and reliable delivery at highly competitive rates.