Picture used for illustrative purpose.

The Abu Dhabi National Oil Company (Adnoc) on Tuesday announced the award of a Dhs2.73 billion ($744 million) contract for the full field development of the Belbazem Offshore Block, underscoring its drive to unlock and maximise value from all of Abu Dhabi’s fields as it expands its oil production capacity to 5 million barrels per day (mmbpd) by 2030.

Located 120 kilometres northwest of Abu Dhabi city, the Belbazem Block consists of three so-called marginal offshore fields; Belbazem, Umm Al Salsal, and Umm Al Dholou.

Al Yasat Petroleum Operations Company (Al Yasat), Adnoc’s subsidiary and joint venture (JV) with China National Petroleum Corporation (CNPC) awarded the engineering, procurement and construction (EPC) contract to the National Petroleum Construction Company (NPCC).

Adnoc and CNPC hold 60 per cent and 40 per cent stakes in Al Yasat respectively, underpinning the strong bilateral ties and energy partnership between the UAE and China.

The EPC contract award follows a competitive tender process and will see 65 per cent of the award value flow back into the UAE economy under Adnoc’s In-Country Value (ICV) programme, highlighting how Adnoc continues to prioritize ICV as it delivers its 2030 strategy.

Yaser Saeed Almazrouei, Adnoc Upstream Executive Director, said, “We are very pleased to commence the full field development of the Belbazem Offshore Block, together with our strategic partner CNPC. This award demonstrates our commitment to maximise value from all of Abu Dhabi’s hydrocarbon resources for the benefit of the UAE and our partners. NPCC was selected after a rigorous tender process that ensures it will deploy best-in-class technology and expertise to execute this strategic project, with a substantial part of the award value flowing back into the UAE’s economy to stimulate local economic growth, in line with the wise directives of our Leadership.” The scope of the award covers engineering, procurement, construction, and commissioning activities for the offshore facilities required to enable full production capacity of 45,000 bpd of light crude with API gravity of around 35 degrees and 27 million standard cubic feet per day (mmscfd) of associated gas from Belbazem. The first oil is expected in 2023.

As part of the process leading up to the EPC award, Al Yasat undertook a front-end engineering design (FEED) competition among the bidders to optimise the project. This initiative reduced the originally scheduled tender time by up to 12 months by removing the need for the technical bidding process for the EPC stage and has enabled savings of approximately $190 million (Dhs697.3 million) in capital expenditure (CAPEX).

Shaheen Al Mansoori, Acting CEO of Al Yasat, said, “The FEED competition and EPC award for the Belbazem Offshore Block highlight Al Yasat’s focus on costs and competitive approach to ensure we can commercially develop our concession areas and deliver long-term and sustainable value for Adnoc and our partner CNPC. Al Yasat will continue to drive cost efficiencies as we unlock value from those of Abu Dhabi’s fields which are comparatively smaller and require a lean operating model to optimize their production and value potential.”

The project scope includes three offshore Well Head Towers (WHTs), one in each of the Block’s three fields, interconnecting sub-sea pipelines, and cables to Zirku Island, located around 60 kilometers from Belbazem field. The scope also covers the development of greenfield facilities for water injection, produced water treatment, gas compression, and associated utilities as well as brownfield works for tie-in to existing facilities at Zirku Island.

Al Yasat’s concession areas cover two blocks; one offshore and one mixed onshore/offshore. The offshore block includes oil fields at Bu Haseer, Belbazem, Umm Al Salsal, Umm Al Dholou, and Arzanah while the onshore/offshore block is located southwest of Abu Dhabi city.

Separately, Adnoc announced on Tuesday that it has signed long-term gas sales agreements with two of the UAE’s leading industrial companies: Emirates Steel (ES), the largest integrated steel producer in the UAE, and Arkan, a construction and building materials company in Abu Dhabi.

The agreements underscore the role of natural gas as a key enabler for the UAE’s industrial sector, and engine of the nation’s economic growth and diversification, and support the Ministry of Industry and Advanced Technology’s (MoIAT) “Make it in the Emirates” strategy. It also emphasises Adnoc’s drive to deliver a more sustainable and economic gas supply and enable gas self-sufficiency for the UAE as part of its 2030 strategy.

Under the terms of the agreements, ADNOC will supply natural gas to Emirates Steel and Arkan for the next 10 years to support the growing energy demand and feedstock of Abu Dhabi’s industrial sector.