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Aramco and ADNOC boost 3Q19 contract value

Published by , Editorial Assistant
Hydrocarbon Engineering,

The global oil and gas industry has witnessed a substantial boost from contracts activity in the Middle East, which has resulted in a contract value of US$44.4 billion in 3Q19, according to GlobalData.

The increase in contract value is primarily attributed to Saudi Aramco’s 34 engineering, procurement and construction (EPC) related contracts (worth over US$18 billion) for projects such as the Marjan and Berri field incremental development program in Saudi Arabia, alongside ADNOC’s US$3.6 billion contract for the supply of 1 million t of casing and tubing to support exploration and production activity in the UAE) The reported contract value is comparable to the previous quarter, which recorded US$45.5 billion in value – despite there being a slight decline in the number of contracts from 1528 in 2Q19 to 1386 in 3Q19.

The company’s latest report, ‘Q3 2019 Global Oil & Gas Industry Contracts Review’, states that the upstream sector reported 1035 contracts in 3Q19, followed by midstream and downstream/petrochemical sector with 255 and 109 contracts, respectively, during the quarter.

North America recorded the most contracts with 489, representing 35% of the total in 3Q19. This was followed closely by Europe with 471 contracts, accounting for 34% of the total.

Pritam Kad, Oil and Gas Analyst at GlobalData, commented: “Saudi Aramco’s commitment towards enhancing local presence is demonstrated in-line with its’ In-Kingdom Total Value Add (IKTVA) initiative, which is designed to drive domestic value creation. The recent 34 EPC-related contracts, worth over US$18 billion, also support this initiative as most of the contract work will be undertaken by local companies/subsidiaries. On the similar note, ADNOC’s US$3.6 billion casing and tubing supply contract, awarded during 3Q, has the potential to achieve an in-country value of over 50%, which is significant.”

Of the total contracts in 3Q19, 61% were operation and maintenance (O&M) related contracts, followed by multiple-scope contracts such as construction, design and engineering, installation, O&M, and procurement, which accounted for 12%.

Notable contracts awarded by Saudi Aramco during 3Q19, include multiple EPC-related contracts for the Marjan and Berri field Increment development program. Some of these key contracts were McDermott International and COOEC consortium’s US$3.5 billion contract for the EPC and installation (EPCI) of a gas-oil separation plant (GOSP); McDermott International’s US$1.7 billion EPCI contract for offshore gas facilities and pipelines; Saipem Onshore’s E&C division’s two EPCI services contracts combined (worth over US$3.5 billion) for the development of the land facilities of the Abu Ali Crude expansion, oil and gas separation plant, and Khursaniyah Gas Plant (KGP) facilities; Tecnicas Reunidas’ US$3.36 billion EPCI contract for a gas-processing plant and recovery and fractionation facilities; and the L&T Hydrocarbon Engineering (LTHE) and EMAS AMC consortium’s mega contract (worth over US$1 billion) for an EPCI of oil facilities, tie-in platforms, production deck modules (wellhead decks), subsea pipelines and subsea cables, as well as the replacement of existing control gears at offshore platforms.

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