Ad­noc signs con­tracts for Bab and Up­per Zakum fields de­vel­op­ment

The National - News - - BUSINESS - JENNIFER GNANA

The Abu Dhabi Na­tional Oil Com­pany (Ad­noc) is set to sig­nif­i­cantly in­crease its pro­duc­tion ca­pac­ity with the ex­pan­sion of its off­shore Up­per Zakum and on­shore Bab oil­fields af­ter sign­ing two con­tracts to meet planned out­put tar­gets.

The com­pany closed an agree­ment yes­ter­day with ExxonMo­bil’s Abu Dhabi sub­sidiary and Ja­pan’s In­pex Cor­po­ra­tion to in­crease pro­duc­tion ca­pac­ity from its off­shore Up­per Zakum oil­field to a mil­lion bar­rels a day by 2024.

“ExxonMo­bil and In­pex, along­side our other part­ners, have played an im­por­tant role in the de­vel­op­ment of our oil and gas as­sets,” said Dr Sul­tan Al Jaber, UAE Min­is­ter of State and Ad­noc group chief ex­ec­u­tive.

“This agree­ment is an­other mile­stone in our ef­forts to forge part­ner­ships that bring tech­nol­ogy, ex­per­tise and cap­i­tal aimed at de­liv­er­ing greater eco­nomic value and lev­els of re­cov­ery from our re­sources.”

Ad­noc first part­nered with Ja­pan Oil De­vel­op­ment Com­pany (Jodco), which is wholly owned by In­pex, to de­velop Up­per Zakum in 1977.

The off­shore field, dis­cov­ered the same year, is the sec­ond largest in Abu Dhabi and the fourth largest in the world.

US oil ma­jor ExxonMo­bil joined Ad­noc and Jodco to de­velop the field in 2006, when plans were drawn up to boost pro­duc­tion ca­pac­ity to 750,000 bar­rels per day from 500,000 bpd.

The Up­per Zakum project will in­volve the con­struc­tion of 450 wells and 90 plat­forms over its life­time on four ar­ti­fi­cial is­lands in shal­low wa­ter.

Ad­noc an­nounced last month it was hold­ing ad­vanced dis­cus­sions with Ja­panese firms to re­new off­shore con­ces­sions that are set to ex­pire next March. Apart from Up­per Zakum, Jodco holds stakes in the off­shore Satah and Umm Al Dalkh fields, which be­gan pro­duc­tion in the eight­ies. The Ja­panese firm holds a 12 per cent stake in the three off­shore fields, as well as the off­shore Nasr, which be­gan pro­duc­tion in 2015.

The Abu Dhabi firm also agreed an en­gi­neer­ing, pro­cure­ment and con­struc­tion con­tract with China Petroleum En­gi­neer­ing & Con­struc­tion Cor­po­ra­tion (CPECC), a sub­sidiary of China Na­tional Petroleum Cor­po­ra­tion, to ex­pand pro­duc­tion ca­pac­ity at the on­shore Bab field to 450,000 bpd from its present ca­pac­ity of 420,000 bpd.

The Chi­nese com­pany won the con­tract af­ter sub­mit­ting the low­est bid to de­velop the in­te­grated oil fa­cil­i­ties op­er­ated by Ad­noc On­shore in Septem­ber.

“The de­ci­sion to mod­ernise our pro­duc­tion in­fra­struc­ture at the large Bab field is an­other clear sig­nal that Ad­noc is mak­ing smart in­vest­ments to in­crease pro­duc­tion ca­pac­ity, en­hance the long-term pro­duc­tiv­ity and max­imise the prof­itabil­ity of Abu Dhabi’s oil re­serves, as we cre­ate a more prof­itable up­stream busi­ness, in line with our Supreme Petroleum Coun­cil ap­proved 2030 growth strat­egy,” said Dr Al Jaber.

As part of its as­set up­grade at Bab, Ad­noc is set to de­ploy clus­ter drilling, in which mul­ti­ple oil wells will be “co-lo­cated in one place”, the firm said.

The agree­ment with CPECC fol­lows Ad­noc’s pivot to the East, fol­low­ing the oil prices down­turn that prompted the na­tional oil com­pany’s reval­u­a­tion of strat­egy.

In Fe­bru­ary, CNPC took an 8 per cent stake in Adco, while China En­ergy took a 4 per cent stake in the Ad­noc sub­sidiary that op­er­ates the largest on­shore con­ces­sion in the emi­rate.

As a re­sult, Chi­nese in­ter­ests com­bined ac­count for the largest for­eign hold­ings in the con­ces­sion, which also in­cludes France’s To­tal, BP, In­pex and South Korea’s GS En­ergy with Ad­noc the ma­jor share­holder.

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