Dh5bn contract for creating 10 Ghasha artificial islands

By Eudore R. Chand

ABU DHABI 7 February 2019: The Abu Dhabi National Oil Company (Adnoc) yesterday announced the award of a dredging, land reclamation and marine construction contract to build multiple artificial islands in the first phase of development of the Ghasha Concession.

The contract awarded to the UAE’s National Marine Dredging Company (NMDC) is valued at Dh5 billion (US$1.36 billion) and will achieve substantial In-Country Value of over 70 percent. The Ghasha Concession consists of the Hail, Ghasha, Dalma, Nasr and Mubarraz offshore sour gas fields.

Under the terms of the contract, NMDC will construct 10 new artificial islands and two causeways, as well as expand an existing island, Al Ghaf. The project is expected to take 38 months to complete and will provide the infrastructure required to further develop, drill and produce gas from the sour gas fields in the Ghasha Concession. At peak construction, the project is expected to employ over 3,500 people.

The names of the new islands in the Ghasha Concession were drawn from pearl diving sites in the area and reflect the rich history and culture of the region. They are Ghanem, Sawalem, Chananiz, Mudaifena, Reeah, Seebeh, Seemeh, Shalhah, Jzool and Duroob. The pearl diving tradition is tightly woven into the UAE culture and dates back around 7,000 years ago, long before oil was discovered in the country.

Several Benefits

Artificial islands provide significant cost and environmental benefits, particularly in shallow water, by enabling the use of lower-cost land-drilling rigs instead of high-cost offshore jack-up drilling rigs. They also provide greater flexibility for extended reach drilling when compared to offshore rigs. The use of artificial islands will eliminate the need to dredge over 100 locations for wells and provide additional habitats for marine life. Adnoc has a proven record of developing artificial islands, including the construction of four artificial islands for the Upper Zakum expansion project. Adnoc’s Upper Zakum field is the second-largest offshore oil field and the fourth-largest oilfield in the world.

The award was signed by Abdulmunim Al Kindy, Adnoc Upstream Executive Director, and Yasser Zaghloul, NMDC CEO, and was witnessed by Dr. Sultan Ahmad Al Jaber, Minister of State and Adnoc Group CEO, and Mohammed Thani Murshed Al Rumaithi, Chairman of NMDC.

In-Country Value

As part of the selection criteria for the contract, Adnoc carefully considered the extent to which bidders would maximise In-Country Value in the delivery of the project. This is a mechanism integrated with Adnoc’s tender evaluation process, aimed at nurturing new local and international partnerships and business opportunities, catalyzing socio-economic growth and creating job opportunities for UAE nationals. The successful bid by NMDC prioritised UAE sources for materials, as well as the use of mostly local suppliers, manufacturers and workforce, resulting in a total local spend of over Dh3.62 billion (almost US$1 billion). NMDC will also work with international partners to deliver the project.

Dr. Shaikha Salem Al Dhaheri, Acting Secretary General of Environment Agency – Abu Dhabi also attended the signing ceremony and commented, “From the very early stages of exploration, ADNOC has worked in close partnership with the Environment Agency-Abu Dhabi (EAD) to ensure that this oil and gas development project, including artificial islands, is sustainable – both for the environment and the people. This included conducting one of the largest marine environmental baseline surveys in the UAE’s history in order to assess the marine life in the area, understand any potential impacts and ensure that the development and management plans protect the diverse marine ecosystems and mitigate any potential impact on the sensitive habitats and endangered species. We look forward to continuing this close collaboration with ADNOC and EAD as together we manage and develop Abu Dhabi’s natural resources sustainably and for the benefit of our nation.”

Adnoc recently awarded stakes in the Ghasha Concession to Italy’s Eni (25 percent), Germany’s Wintershall (10 percent) and Austria’s OMV (5 percent). The mega-project is expected to produce over 1.5 billion cubic feet of gas per day when it comes on stream around the middle of the next decade, enough to provide electricity to more than two million homes. In addition, more than 120,000 barrels per day of oil and high-value condensates are expected to be produced.