ADNOC awards record $4 billion framework agreements for integrated drilling fluids services

Abu Dhabi National Oil Company (ADNOC) on Tuesday announced the award of three framework agreements valued at $4 billion (AED14.68 billion) for integrated drilling fluids services (IDFS) to support the ongoing expansion of its lower cost and lower-carbon intensive production capacity as it responds to growing global demand for energy.

The awards, the largest of their kind in the industry, were awarded to ADNOC Drilling Company P.J.S.C (ADNOC Drilling), Schlumberger Middle East S.A. (SLB), and Halliburton Worldwide Limited Abu Dhabi (Halliburton). They cover ADNOC’s onshore and offshore fields and will run for five years with an option for a further two years. More than 80% of the award value could flow back into the UAE’s economy under ADNOC’s In-Country Value (ICV) program over the duration of the agreements. Furthermore, the contractors will create job opportunities for UAE Nationals and invest in local manufacturing of equipment and chemicals required for the IDFS.

Yaser Saeed Almazrouei, ADNOC Upstream Executive Director, said: “These record framework agreements for integrated drilling fluids services continue ADNOC’s significant investment in drilling-related services to enable the expansion of our production capacity and responsibly unlock the UAE’s leading low-cost, lower-carbon intensity hydrocarbons. In line with the wise directives of the UAE’s leadership, we are prioritising in-country value as we respond to growing global demand for energy and these agreements will create skilled job opportunities for UAE Nationals in the private sector, drive domestic manufacturing and support the UAE’s industrial growth.”

The framework agreements will enable investment in local manufacturing of equipment and facilities, including in Liquid Mud Plants and a Waste Management Facility, as well as key commodity chemicals. This underscores ADNOC’s efforts to create long-term opportunities in the UAE’s manufacturing sector and drive industrial growth. ADNOC Drilling’s scope of the framework agreements is valued at up to $1.6 billion (AED5.87 billion). This reflects the company’s transformation and expansion of its service profile into a fully Integrated Drilling Services (IDS) company, following the development of its Oilfield Services division in partnership with Baker Hughes.

The framework agreements were awarded following a competitive tender process. They will enable hundreds of millions of dollars in cost savings through ADNOC’s optimised procurement approach that focuses on longer-term contracts with an optimal number of suppliers that can reliably deliver at competitive rates. Since November 2021, ADNOC has awarded over $16 billion (AED 58.72 billion) in agreements for drilling-related equipment and services, including these awards and other agreements for wellheads, downhole completion equipment, liner hangers, cementing service, wireline logging, directional drilling and logging while drilling.

The average ICV of all of these awards combined amount to 70% value flowing back into the UAE economy, supporting manufacturing growth, employment and economic diversification.
IDFS are necessary to drill the wells that will enable ADNOC expand its oil production capacity and drive gas self-sufficiency for the UAE. Some of these services include provision of products, engineering, technical laboratory support, filtration equipment and solid control equipment.