UAE oil and gas contract awards rebound

So far in 2017, there have been engineering, procurement and construction (EPC) contract awards worth a total of $2,265m in the UAE’s oil, gas and petrochemicals sector, according to regional projects tracker MEED Projects.

This is already marginally above the total for 2016 and there are still some large contract awards expected before the end of the year. These upcoming deals could make 2017 the best year for oil and gas contract awards in the UAE since 2014.

In the UAE, there are hydrocarbons projects worth more than $10bn that are at the bid evaluation phase.

Among these is the Bab integrated facilities project expansion, which is expected to be worth between $1.5bn and $2bn.

This contract has been finalised and is ready to be awarded, according to an industry source.

The source says state-backed operator Abu Dhabi Company for Onshore Petroleum Operations (Adco) is waiting for the right opportunity to formally announce the contract award and sign the agreement.

Adco is likely to choose the Abu Dhabi International Petroleum Exhibition & Conference (Adipec) 2017, which is due to take place on 13-16 November, as the venue to announce the contract, according to the source.

Hydrocarbons contracts due for award in 2017*
Budget ($m) Project owner Completion
Processing offshore crude project at Ruwais refinery 3,000 Abu Dhabi Oil Refining Company (Takreer) 2020
Bab integrated facilities project expansion 2,000 Adco 2019
Haliba oil field development 550 Al-Dhafra Petroleum 2020
Facilities capacity enhancement project 400 Zakum Development Company 2019
New tie-in southeast: package D 300 Adco 2020
Sulphur recovery unit 1106 at Ruwais 250 Takreer 2020
New tie-in southeast: package C 200 Adco 2020
Prime Terminal Fujairah: phase 2 150 Primestar Energy/IL&FS Engineering & Construction (E&C) 2020
Extension of bagging line 3 pelletising plant 150 Abu Dhabi Polymers Company (Borouge) 2019
Replacement of emergency diesel generators and vent systems 100 Abu Dhabi Marine Operating Company (Adma-Opco) 2019
Expansion of manifold stations in Bab and Asab 70 Abu Dhabi Company for Onshore Petroleum Operations (Adco) 2019
Fujairah storage terminal expansion: phase 3 50 Emarat 2019
Oil terminal: phase 2 – package 2 40 Fujairah Oil Terminal 2020
Oil terminal: phase 2 – package 1 40 Fujairah Oil Terminal 2020
Oil terminal: phase 2 – package 1 40 Fujairah Oil Terminal 2020
*=All contracts at bid evaluation stage. Source: MEED Projects

Another project for which a major deal may be let before the end of the year is the Haliba oil field development. That contract is estimated to be worth $550m.

According to industry sources, the negotiations between the client and the low bidder on the scheme, Larsen & Toubro, has been completed.

However, the contract has yet to be officially awarded to Larsen & Toubro. It is not known why the project has stalled at this late stage and it remains to be seen whether it will be awarded before the end of the year.

The client on the project is Al-Dhafra Petroleum Operations Company and the Haliba oil field development is part of its larger oil field development project in Fujairah, which is estimated to be worth $5bn. The scope of this scheme includes developing one offshore concession block and two onshore concession blocks.

There is a possibility the EPC contract for the processing offshore crude project at the Ruwais refinery could also be awarded before the end of the year.

The winner of the contract will be responsible for an expansive upgrade of the refinery. The scope of work on this project will include modifying the existing units in order to process 420,000 barrels a day of offshore crude. It will also involve the construction of several new units.

This project is estimated to be worth $3bn and the client is Abu Dhabi Oil Refining Company (Takreer), a subsidiary of Abu Dhabi National Oil Company (Adnoc).

Bids were submitted on this scheme more than eight months ago, but it has stalled for unknown reasons since then.

South Korea’s Samsung Engineering was the low bidder when bids were submitted and there was a long period of negotiations between Takreer and Samsung after the bid submission, according to industry sources.

However, although there has been no movement on this project over the second half of 2017, it could still be awarded before the end of the year.

Even if the Ruwais refinery upgrade and the Haliba oil field development are not awarded before the end of the year, the UAE is still likely to have its best year for oil and gas contract awards since 2014.

If the Bab integrated facilities project expansion deal is awarded at Adipec, that will push the total value of contract awards to more than $3.7bn. This would be just shy of the nearly $4bn of hydrocarbons contract awards made in 2015.

It would have to be a very busy final quarter for 2017 to beat the level of contract awards seen in 2014 and 2013, when $9.8bn and $11.2bn of deals were inked respectively. 

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25 October, 2017 | .By Wil Crisp