Offshore Technology

Daily Newsletter

10 August 2023

Daily Newsletter

ADNOC Gas awards $3.6bn contract for gas infrastructure projects

The contract was awarded to a joint venture partnership of Abu Dhabi’s National Petroleum Construction Company and Spain’s Tecnicas Reunidas.

UAE state oil and gas giant ADNOC (Abu Dhabi National Oil Company) has announced that its gas unit, ADNOC Gas, has awarded a $3.6bn (Dh13.22bn) gas infrastructure expansion contract to a joint venture partnership of the National Petroleum Construction Company (NPCC) and Spanish engineering company Tecnicas Reunidas.

The Maximizing Ethane Recovery and Monetisation infrastructure programme aims to increase ethane extraction from ADNOC Gas onshore facilities by 35–40% at its existing Habshan complex.

Following this, ADNOC Gas intends to add a 120km natural gas liquids pipeline to connect the complex to Ruwais, where ADNOC’s 922,000-barrel-per-day refinery is located. This is part of 300km of pipeline infrastructure in the country that the company committed to build in July, taking the total length of the company's domestic pipelines to more than 3,500km.

The total cost of the contract awarded is $3.6bn. In February, ADNOC sold 4% of its gas unit in an IPO for $2bn.

NPCC is a wholly owned subsidiary of Abu Dhabi’s ADQ and Tecnicas Reunidas is a construction and engineering company working on power plants, focused on the oil and gas industry.

ADNOC Gas CEO Ahmed Mohamed Alebri stated: “This capital project represents ADNOC Gas’ latest investment in its gas processing infrastructure and underscores our commitment to responsibly meeting our customers’ current and future energy demand for natural gas and its feedstock.”

He added: “The expansion of our gas processing infrastructure will also provide additional energy to the country’s growing industrial section, while stimulating economic growth and diversification through the significant ICV generated by the contract.” The company also stated that 70% of the value of the deal would flow back into the local economy.

It comes in the week where ADNOC Gas revealed it made a net income of $984m in the second quarter of 2023. Total company revenue year-on-year fell from $7.12bn in Q2 2022 to $5.39bn in Q2 2023, a 24% drop. ADNOC attributed the fall to lower gas prices in the quarter.

ESG 2.0 marks a shift towards stricter environmental rules

ESG is moving into a different era, which we call ESG 2.0. While ESG 1.0 was driven by voluntary corporate action, spurred by pressure from activist consumers and investors, ESG 2.0 is being driven by a new wave of government policies. The EU has taken the regulatory lead, with rules introduced or in the pipeline that will price emissions, regulate the use of the terms ‘ESG’ and ‘sustainability’ in marketing materials, and make ESG reporting mandatory. The US has taken a different approach, favoring less regulation and more financial support in the form of tax breaks for clean industry (renewables plus nuclear and hydrogen). China is planning to expand its emissions trading system to more sectors, decarbonize its heavy industry, and ramp up its use of renewables. The new policy direction is mainly motivated by the ambition to hit net zero emissions targets. But on top of this, governments are now competing for clean industry and trying to challenge China’s leadership on the production of the world’s green technologies such as solar panels and batteries, as well as the production and refinement of materials needed for energy transition such as lithium. These driving forces are leading to policy that will impact every sector, not just heavy industry, and will keep ESG near the top of the regulatory agenda over the longer term.