UAE records pick-up in oil and gas contract awards
So far this year, the UAE has awarded $2.3bn-worth of engineering, procurement and construction (EPC) contracts for hydrocarbons projects, 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.
There are currently more than $10bn of hydrocarbons projects in the bid evaluation phase, including the Bab integrated facilities expansion, estimated to be worth between $1.5bn and $2bn. According to an industry source, the contract has been finalised and is ready to be awarded.
State-backed operator Abu Dhabi Company for Onshore Petroleum Operations (Adco) is expected to use the Abu Dhabi International Petroleum Exhibition & Conference (Adipec), which will take place on 13-16 November, to announce the contract award.
Another project that may be signed before the end of the year is the Haliba oil field development. This contract is estimated to be worth $550m.
According to industry sources, negotiations between the project owner and the low-bidder on the scheme – India’s Larsen & Toubro – have been completed, although an official award has yet to be made. The project owner is Al-Dhafra Petroleum
Operations Company and the Haliba development is part of its larger oil field development project in Fujairah, which is estimated to be worth $5bn.
The scope of this project includes developing one offshore concession block and two onshore concession blocks. The two other concessions are the Al-Dhafra-Mushash field and the Mandous field.
Hydrocarbons contracts due for award in 2017* | |||
Budget ($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 |
There is also a chance that an EPC contract for an expansive upgrade of the Ruwais refinery to process offshore crude could be awarded before the end of the year.
The scope of work will include modifying existing units in order to process 420,000 barrels a day of offshore crude and the construction of several units. The project is estimated to be worth $3bn.
Project owner Abu Dhabi Oil Refining Company (Takreer) asked companies to submit revised prices in December 2016, after receiving the initial commercial EPC bids at the end of 2015, which came in over budget.
Samsung Engineering submitted the lowest-priced revised bid for the tender, but Takreer has been negotiating to bring the price down further, according to industry sources. The other bidders were GS E&C, also of South Korea, and Spain’s Tecnicas Reunidas.
Even if the Ruwais refinery upgrade and the Haliba oil field development are not awarded before the end of 2017, the UAE is still likely to have its best year for oil and gas contract award activity since 2014.
If the Bab integrated facilities expansion contract is awarded at Adipec, it 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 signed in 2015.
It would have to be a very busy final quarter for 2017 to beat the level of awards seen in 2014 and 2013, when $9.8bn and $11.2bn of deals were inked respectively.