The Abu Dhabi National Oil Company (ADNOC) has awarded three multi-billion-dollar contracts for the procurement of casing and tubing, the United Arab Emirates state-owned oil company announced on Wednesday.
The contracts – awarded to Consolidated Suppliers Establishment, representing Tenaris S.A. (from Luxembourg); Abu Dhabi Oilfield Services Company, representing Vallourec S.A. (from France); and Habshan Trading Company, representing Marubeni Corporation (from Japan) – have a combined scope of AED 13.2 billion ($3.6 billion) and are the first in a series of AED 55 billion ($15 billion) total drilling-related procurement expenditures that ADNOC plans to make in the next five years.
Under this first group of awards, the three companies will supply a combined 1 million metric tons of casing and tubing, over 5 years, to support ADNOC’s drilling activities based on forecasted group requirements.
Targeting 4 million barrels of oil production capacity per day (mmbpd) by the end of 2020 and 5 mmbpd by 2030, ADNOC said it is driving to deliver integrated drilling services as it plans to increase its conventional drilling by 40% by 2025 and substantially ramp up the number of its unconventional wells.
As part of its strategy, ADNOC said it 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. The approach is enabling the company to create more value, drive efficiencies, and ensure that strategic materials and components are available on time while achieving substantial efficiency gains as it increases overall procurement spend, it said.
Abdulmunim Saif Al Kindy, ADNOC Upstream Executive Director, said, “The award of contracts with a combined scope that is one of the world’s largest for tubing and casing follows a highly competitive bid process. It underscores ADNOC’s optimization efforts to drive commerciality across our growing portfolio. In addition, it is testament to our targeted approach to engage with value-add partners to unlock value as well as enhance the performance and returns on our assets and capital.
“These agreements will provide ADNOC with increased flexibility to proactively respond to the demands of the evolving energy landscape as we ramp up our drilling activities and deliver our 2030 strategy.”
ADNOC's five-year, $15 billion drilling-related procurement expenditure falls under AED 486 billion ($132 billion) five-year capital expenditure approved by Abu Dhabi’s Supreme Petroleum Council (SPC) in November 2018. The other procurement categories – excluding today's award – are downhole completion equipment, wellheads, and xmas trees, liner hangers, drilling fluids, directional drilling, cementing and wireline logging.