Adnoc Awards Sour Gas Plant Contract to Saipem

Abu Dhabi National Oil Co. (Adnoc) said it has awarded a $510 million contract to expand capacity at its Shah sour gas processing plant to Italy's Saipem. The engineering, procurement and construction contract calls for Saipem to raise capacity at the plant by 13% to 1.45 billion cubic feet per day by 2023. The contract was awarded by Adnoc Sour Gas, a 60-40 joint venture between Adnoc and Occidental Petroleum. Largest Project of Its Kind The joint venture operates the $10 billion Shah sour gas project, which started production in early 2015 and is the largest sour gas development in the Middle East (IOD Mar.25'15). As a result of this latest expansion, the gas processing plant's capacity will have been increased by a combined 45% from its original capacity of 1 Bcf/d. The contract award to Saipem is the latest sign that Abu Dhabi remains committed to its oil and gas expansion plans, despite a push toward decarbonization of the global energy system. Adnoc said that more than 50% of the value of the contract will flow back into the economy of the United Arab Emirates (UAE) under its so-called In-Country Value program. Abu Dhabi is the largest of the emirates that make up the UAE. The sour gas project (formerly known as Al-Hosn) is a key asset for Occidental in the Middle East. The US producer is also active in Oman, where it has producing assets in the north and south of the country (IOD Feb.24'21). Self-Sufficiency Plans Developing Abu Dhabi's vast sour gas resources is an integral part of Adnoc's 2030 target of making the UAE self-sufficient in gas by tapping sour and unconventional gas reserves, and potentially turning it into a net exporter of gas. The gas is needed to meet rapidly rising domestic demand, which is being driven by power generation, demand from industries such as petrochemicals, and injection of gas into oil reservoirs to boost recovery rates. Abu Dhabi is pressing ahead with its gas plans and the expansion of its oil production capacity to 5 million barrels per day from just above 4 million b/d now, even as the transition to low-carbon energy is accelerating (IOD May18'21). Adnoc argues that its low-carbon, low-cost hydrocarbon production gives it a competitive advantage, even in a world in which overall demand for fossil fuels is set to decline in the long term. Oliver Klaus, Dubai