Abu Dhabi National Oil Company (Adnoc) has revived its Hail and Ghasha offshore sour gas field development project and intends to overhaul the manner in which it executes the multibillion-dollar project, according to industry sources.

Adnoc issued notifications to oil and gas consultancy companies on 25 July about its plan to issue new tenders for fresh study and front-end engineering and design (feed) works on the Hail and Ghasha scheme, which was previously estimated to be worth up to $15bn.

Companies that have received the advance tender for new study/pre-feed and feed works are understood to include:

  • Fluor Corporation (US)
  • KBR (US)
  • Technip Energies (France)
  • Wood Group (UK)
  • Worley (Australia)

“After several months of uncertainty surrounding the Hail and Ghasha project, Adnoc seems to have revised its strategy. Looks like several components of the project would change considerably, as the notices about fresh pre-feed and feed suggest,” one source said.

“The prime reason for restarting the project, in a way, is cost optimisation, as well as aligning it to Abu Dhabi’s energy goal,” another source said.

“If you approach [it] in a smart manner by changing the concept, feed and other engineering components, there are a lot of cost savings to be had,” the second source said.

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Hail and Ghasha scheme

The Hail and Ghasha fields are located in Abu Dhabi’s offshore Ghasha sour gas concession. Adnoc intends to produce more than 1.5 billion cubic feet a day of sour gas from the project by around the middle of this decade.

US-headquartered Bechtel had carried out the previous feed works on the project, while KBR had been the overall project management consultant.

According to the original Hail and Ghasha plan, the engineering, procurement and construction contract (EPC) works on the project were divided into four main packages. The packages, their estimated contract values and the contracting entities bidding for each are as follows:

  • Package 1 (offshore) – $3bn
    • Saipem (Italy) / National Petroleum Construction Company (NPCC, UAE)
    • McDermott (US) / Tecnicas Reunidas (Spain)
    • Archirodon (Greece) / Sinopec Engineering (China)
    • Petrofac (UK)
  • Package 2 (offshore) – $2bn
    • Petrofac (UK) / Samsung Engineering (South Korea)
    • Saipem (Italy) / China Petroleum Engineering & Construction Corporation (CPECC, China) / NPCC (UAE)
    • Hyundai Engineering & Construction (South Korea)
    • Archirodon (Greece) / Sinopec Engineering (China)
  • Package 3 (onshore) – $1bn and $2bn
    • Samsung Engineering (South Korea) / Petrofac (UK)
    • Archirodon (Greece) / Sinopec Engineering (China) / Consolidated Contractors Company (Lebanon)
    • Dodsal (India)
    • Tecnimont (Italy)
  • Package 4 (onshore) – $4bn and $6bn
    • Petrofac (UK) / Samsung Engineering (South Korea)
    • Tecnicas Reunidas (Spain) / McDermott (US)
    • Tecnimont/Larsen & Toubro Hydrocarbon Engineering (India)
    • Saipem (Italy) / CPECC (China)

An Adnoc spokesperson has previously said that the estimated contract values reported for the Hail and Ghasha project EPC packages are ‘purely speculative’.

A fifth package, relating to early civil works and building of support structures on the project, has been awarded to local contractor Al-Jaber Energy Services.

Project timeline

Adnoc began the EPC tendering phase for the Hail and Ghasha development in early 2019. In the previous bidding round, technical bids for EPC packages two, three and four were submitted by 11 November, and technical entries for package one were submitted by 25 November.

As part of the original project schedule, Adnoc was set to receive commercial bids in January 2020.

However, in the wake of the Covid-19 pandemic last year, and its severe impact on the global energy industry, particularly on oil and gas prices, Adnoc delayed progress on the Hail and Ghasha scheme.

Since September last year, Adnoc had been considering downsizing the overall scope of work on the Hail and Ghasha development to reduce the total capital spending required to develop the asset, and eventually issued a revised scope of work in the form of a new tender bulletin.

Following the issue of the new tender bulletin, contractors submitted revised technical bids by 5 December 2020, in line with the recalibrated scope of work on the four EPC packages.

Commercial bids were submitted by 24 February this year.

With Adnoc now looking to significantly modify key aspects of the Hail and Ghasha scheme, it remains to be seen when the UAE energy major and its other equity partners in the Ghasha concession will be able to make the final investment decision on the project development.

This article is published by MEED, the world’s leading source of business intelligence about the Middle East. MEED provides exclusive news, data and analysis on the Middle East every day. For access to MEED’s Middle East business intelligence, subscribe here.