PDO signs US$4 billion long-term service contracts

Petroleum Development Oman (PDO) has signed major service contracts worth US$4 billion covering project delivery and maintenance and integrity work in the North and South of its concession area in Oman.

The agreements with Arabian Industries Projects (AIP) LLC and Special Technical Services (STS) LLC encompass the design and execution of more than 200 on-plot projects and will run for seven years with an optional three-year extension.

Current Omanisation levels will double over the life cycle of the contracts, resulting in several thousand additional employment opportunities for Omanis, with a focus on skilled jobs, supervisors and engineering positions.

A Training for Employment scheme has been introduced, enabling the training, re-skilling and upskilling of over 1,000 Omani personnel, and about 1,500 Omani employees from incumbent PDO contractors will be transferred and redeployed to the new contractors.

Local sub-contracting businesses and small and medium enterprises (SMEs) will also benefit with specific targets for both, and an obligation on the part of the contractors to ensure and monitor their use.

In addition, the deals include a strategy to develop a domestic firm to execute maintenance and integrity tasks in a selected cluster in the PDO oil and gas portfolio within five years.

This further builds on the focus to introduce and mature a domestic contractor for turnarounds to carry out facility maintenance in scheduled shutdowns as recently endorsed by Oman LNG, OQ, OPAL and PDO.

The signings took place at an official contract awards ceremony at PDO’s Mina Al Fahal headquarters, which was attended by PDO Managing Director Raoul Restucci, AIP and STS Chief Executive Officers Sadiq Sulaiman and Rejeesh Mani, and the companies’ Managing Directors Amer Al Sulaimani and Alex Clark.

Restucci said: “These strategic agreements create a win-win culture for PDO, our partner contractors and Oman, in that they maximise capital efficiency, generate multi-million-dollar savings and enhance In-Country Value (ICV) opportunities.

“They represent a benchmark of best practice by capturing the lessons learned over the past 17 years from engineering, maintenance and construction contracts across our concession area. We expect to transition seamlessly from our existing on-plot deals in the coming months, working hand-in-hand with AIP and STS to deliver a large portfolio of projects safely, responsibly and efficiently. Considering the sheer size and dimensions of these contracts, embedding such improvements within 15 months of the tendering period during the COVID-19 pandemic is an outstanding achievement.”

The scope and scale of contracts are significant, spanning the execution of maintenance, integrity, field improvement proposals, turnaround activities, and the delivery of brownfield projects.

Under the terms of the deals, AIP will carry out project delivery in the North of Block 6 and maintenance and integrity work in the South, while STS will be responsible for project delivery in the South and maintenance and integrity in the North.

Clark said: “These landmark contracts mark a new level of collaboration between PDO and STS. They build on a long-standing relationship which spans more than three decades and encompass a significant number of projects undertaken in Oman. Most importantly, the award of these contracts represents a major step forward for development and employment of the local workforce.

“In collaboration with PDO, STS will be developing Omanis at all levels of the contract organisation from the site workforce to the contract leadership and management. The award of these contract will ensure STS can build further on its impressive and dedicated track record of national growth and training.”

Sulaiman added: “Arabian Industries is pleased with the awarding of these long-terms contracts, which demonstrate PDO’s confidence in the capabilities and competencies of local contractors to deliver world class services.”