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.

UAE-hydrocarbons-awards

UAE-hydrocarbons-awards

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. 

Related Posts
A very different crisis for UAE construction
Although there are parallels with 2009, the market is different in 2020 The 2008 global financial crisis has been a dark cloud in the memory of the UAE’s construction sector for ...
READ MORE
Dubai seeks contractors for new creek bridge
Crossing is part of Shindagha corridor scheme Dubai’s Roads & Transport Authority (RTA) has invited construction companies to express interest in the deal to build a bridge across the Dubai Creek. The ...
READ MORE
New UAE companies law could be a precursor for more taxation
There is a widespread expectation that the tax regime will grow On 21 May, the UAE cabinet agreed to allow 100 per cent foreign ownership of companies in the UAE and 10-year visas ...
READ MORE
BRIEFING PAPER: The Quest for Gas
Natural gas production maintains steady incline Middle East producers are boosting natural gas output to meet rising energy demand About $33.5bn-worth of gas exploration and production projects are under execution across the ...
READ MORE
Dubai contractors look for regulation to counter conspiring market forces
Deteriorating market conditions are threatening the delivery of major projects in the emirate As the trading conditions for construction companies continue to deteriorate, there are growing calls from contractors for more ...
READ MORE
BRIEFING PAPER: Securing supply
National targets and government strategies are driving forces to improve food security in the GCC and Egypt Download the latest briefing paper from the MEED Mashreq Services & Manufacturing Partnership Food security ...
READ MORE
Abu Dhabi to tender Borouge 4 in mid-2020
Maire Tecnimont is expected to take between one and one a half years to complete the feed works Abu Dhabi Polymers Company (Borouge), the joint venture of Adnoc and Austria’s Borealis, ...
READ MORE
UAE presses forward with an expansionary budget
Amid strengthening oil revenue and growth conditions, Abu Dhabi is coaxing the economy with a stimulus plan The outlook for the UAE economy is buoyant upward growth, thanks in part to ...
READ MORE
MEED and Mashreq renew partnership for third year
Partnership will grow to accommodate developments in sectors such as construction and energy MEED and Mashreq have announced the extension of their knowledge partnership for a third year. First established in 2017, ...
READ MORE
Blockchain for construction
New downloadable report from MEED, in partnership with Mashreq, examines the opportunities presented by blockchain for the construction sector Why blockchain could be the solution to several of the challenges facing the construction ...
READ MORE
A very different crisis for UAE construction
Dubai seeks contractors for new creek bridge
New UAE companies law could be a precursor
BRIEFING PAPER: The Quest for Gas
Dubai contractors look for regulation to counter conspiring
BRIEFING PAPER: Securing supply
Abu Dhabi to tender Borouge 4 in mid-2020
UAE presses forward with an expansionary budget
MEED and Mashreq renew partnership for third year
Blockchain for construction
14 November, 2017 | .By WIL CRISP