Adnoc awards Dh5b contract for Ghasha artificial islands

At peak construction, the project is expected to employ over 3,500 people

Abu Dhabi, United Arab Emirates, February 7, 2019

Energy giant Adnoc announced on Wednesday the awarding of Dh5 billion contract for dredging, land reclamation and marine construction to build multiple artificial islands.

The artificial islands are part of the first phase of development of the Ghasha Concession comprising the Hail, Ghasha, Dalma, Nasr and Mubarraz offshore sour gas fields.

Adnoc, one of the world's leading diversified energy and petrochemicals groups, said in a statement that the contract, awarded to the UAE's National Marine Dredging Company (NMDC), will achieve substantial in-country value of over 70 per cent.

As per the contract, NMDC will construct 10 new artificial islands and two causeways, as well as expand an existing island, Al Ghaf. The project is expected to take 38 months to complete and will provide the infrastructure required to further develop, drill and produce gas from the sour gas fields in the Ghasha Concession. At peak construction, the project is expected to employ over 3,500 people.

Abdulmunim Al Kindy, Adnoc upstream executive director, and Yasser Zaghloul, NMDC CEO, signed the contract in the presence of the Minister of State and Adnoc Group CEO, Dr Sultan bin Ahmad Sultan Al Jaber and Mohammed Thani Murshed Al Rumaithi, chairman of NMDC.

'This award accelerates the development of the Hail, Ghasha and Dalma sour gas offshore mega-project, which is an integral part of Adnoc's 2030 smart growth strategy,' said Al Jaber. 'As one of the world's largest sour gas projects it will make a significant contribution to the UAE's objective to become gas self-sufficient and transition to a potential net gas exporter.'

Al Jaber said NMDC was selected after a rigorous and competitive tender process. 'The award of this project to a UAE company will generate substantial In-Country Value, supporting local economic growth. In addition, it demonstrates the rapid progress Adnoc is making to leverage and create value from Abu Dhabi's substantial, untapped, hydrocarbon resources.'

The successful bid by NMDC prioritised UAE sources for materials, as well as the use of mostly local suppliers, manufacturers and workforce, resulting in a total local spend of over Dh3.62 billion. NMDC will also work with international partners to deliver the project, said the statement.

Al Rumaithi said the project would contribute to the local UAE economy, support Adnoc's gas developments, and help the UAE's strategy to develop the maritime sector, in order to compete globally.

'Enhancing In-Country Value is an important part of our work plan in the National Marine Dredging Company, as it is for Adnoc. We will achieve this by spending almost one billion dollars of the contract award in the UAE and creating additional employment opportunities for citizens in the maritime sector,' said Al Rumaithi.

NMDC seeks to increase the use of local resources, such as products, facilities and infrastructure in this sector of dredging equipment and services. 'NDMC will contribute to supporting the development and prosperity of the UAE.'

Artificial islands provide significant cost and environmental benefits, particularly in shallow water, by enabling the use of lower-cost land-drilling rigs instead of high-cost offshore jack-up drilling rigs. They also provide greater flexibility for extended reach drilling when compared to offshore rigs. The use of artificial islands will eliminate the need to dredge over 100 locations for wells and provide additional habitats for marine life. Adnoc has a proven record of developing artificial islands, including the construction of four artificial islands for the Upper Zakum expansion project.

The mega-project is expected to produce over 1.5 billion cubic feet of gas per day when it comes on stream around the middle of the next decade, enough to provide electricity to more than two million homes. In addition, more than 120,000 barrels per day of oil and high-value condensates are expected to be produced.

Recently, Adnoc awarded stakes in the Ghasha Concession to Italy's Eni (25 per cent), Germany's Wintershall (10 per cent) and Austria's OMV (five per cent).

In another landmark deal worth $5.8 billion, Adnoc also sealed an agreement with Eni and OMV for selling 35 per cent stake in its refining business. As per the deal, Eni and OMV will acquire a 20 per cent and a 15 per cent share respectively in Adnoc Refining. OMV will pay around $2.5 billion, while Eni will pay around $3.3 billion, giving Adnoc Refining an enterprise value of $19.3 billion.

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