In Oil & Companies News 20/07/2016
Abu Dhabi has delayed an estimated $1 billion oil and gas development project in a further sign of the strain Arab Gulf oil producers are under due to low oil prices, sources close to the project said.
Leading engineering, procurement and construction contractors had been lining up to submit technical bids July 26 for new gas facilities at the Al-Dabbiya oil and gas field, but the deadline has been pushed back while further appraisal activity was carried out, effectively putting the project on hold.
Lying in shallow coastal waters, Al-Dabbiya is one of three oil fields in the North East Bab area being developed by Abu Dhabi Company for Onshore Oil Operations or ADCO. The company hopes to increase sustainable production to 230,000 b/d over the next few years from 100,000 b/d currently.
Maire Tecnimont signed a $2.254 billion contract with ADCO to develop phase three of the field’s surface facilities including gathering networks, and processing facilities and pipelines housed on an artificial island. Total production at the field was to be increased to 145,000 b/d by 2018 from 72,000 b/d currently.
ADCO planned to increase gas production at the field to 220 MMcf/d from non-associated gas reservoirs at Al-Dabbiya. This scheme has now been placed on hold, contractors say, with no new deadline for the bids.
A spokesman for state-owned Abu Dhabi National Oil Co., the largest shareholder in ADCO, denied the project was on hold. He declined to comment on the delays.
“I can confirm that the Al-Dabbiya gas project is not on hold. There is ongoing subsurface appraisal activity, which is part of the project’s ongoing development,” the spokesman said.
The delay was viewed with disappointment by contractors in the UAE. as it is one of only a few major projects tendered this year.
It will also have an impact on ADNOC’s overall plans to boost Abu Dhabi’s oil production by delaying the availability of gas from a new domestic source for injection into the emirate’s mature oil fields to help maintain reservoir pressure and output.
Moreover, the Dabbiya gas development delay is only the latest in a series of setbacks for Abu Dhabi oil and gas developments.
At the end of 2015, ADCO said it was going to reissue a construction tender for the development of the Bab oil field, one of its largest onshore oil fields, narrowing the scope of the scheme.
The original tender covered construction of surface facilities for increasing production to 450,000 b/d from around 300,000 b/d, but this was cancelled in November, making it unlikely that the planned startup date of 2018 will be met. Development has also been halted at the smaller Qusahwira oil field expansion, which aimed to increase production to 55,000 b/d from 30,000 b/d.
ADNOC concluded negotiations with potential new international partners for ADCO late last year as it seeks to increase output to 1.8 million b/d by 2018 from 1.6 million b/d in 2014. The new partners are France’s Total with 10%, Japan’s Inpex with 5% and South Korea’s GS Energy with 3%. ADNOC retains an 82% stake in the concession.
Source: Platts
