UAE's ADNOC awards $764 mil drilling contracts to boost capacity to 5 mil b/d by 2030

UAE's Abu Dhabi National Oil Co. has awarded drilling-related contracts worth $764 million to help boost its oil production capacity to 5 million b/d by 2030 as OPEC's third-biggest producer forges ahead with oil output ramp-ups.

ADNOC Offshore, a unit of the parent company, awarded the contracts to Schlumberger, ADNOC Drilling and Halliburton, it said in a statement July 14. The contracts will provide integrated rigless services across six of ADNOC Offshore's artificial islands in the Upper Zakum and Satah Al Razboot fields, it said.

"These important awards for integrated rigless services will drive efficiencies of drilling and related services, and optimize costs in our offshore operations as we ramp up our drilling activities to increase our production capacity and enable gas self-sufficiency for the UAE," Yaser Almazrouei, ADNOC Upstream Executive Director, said in the statement.

ADNOC is spending $122 billion up to 2025 on growth projects, including the ramp-up in oil production capacity to 5 million b/d by 2030 from around 4 million b/d.

UAE's baseline

OPEC kingpin Saudi Arabia was deep in talks with the UAE July 14 to resolve a dispute over the latter's output target, with the producer group's plans to raise crude output over the coming months with Russia and several allies hinging on the outcome.

The discussions are centering around a preliminary understanding to grant the UAE a new production baseline of 3.65 million b/d from May 2022, according to a source involved in the meeting.

That would be a rise of about 480,000 b/d from its current baseline of 3.168 million b/d, which will remain in place through to April, the source said, asking not to be named due to the sensitivity of the discussions.

Baselines, which were set using October 2018 production volumes, are used by the OPEC+ alliance to set output quotas, so a higher baseline for the UAE would result in a more generous allocation. Emirati officials have sought the revision to reflect the country's increased production capacity.

Delegates from other OPEC+ members said they had yet to be briefed about the deal, which would need to be unanimously approved by the 23 countries in the coalition.

The UAE's energy ministry said July 4 that the Gulf state, along with its international partners, had invested "significantly in growing its production capacity and believes that, if/when the agreement is extended, the baseline reference figures should reflect its actual production capacity, rather than the outdated October 2018 production reference."