Adnoc L&S wins $975 million EPC contract for offshore artificial island

Recently listed Adnoc Logistics and Services has won a $975 million engineering, procurement and construction contract to build an offshore artificial island from United Arab Emirates sister company Adnoc Offshore.

Adnoc L&S’ workscope involves the dredging, land reclamation and marine construction of an artificial island dubbed “G” for the Lower Zakum offshore field development.

The company said this award supports its growth strategy to enter new business areas and unlock fresh revenue streams.

At least 75% of the contract value will flow back into UAE economy through Adnoc’s in-country value programme.

The award is part of Lower Zakum’s long-term development plan (LTDP) that aims to safely and sustainably unlock greater value while helping to meet increasing global energy demand.

Adnoc Offshore said it has extensive experience in deploying the artificial island concept for project delivery, resulting in significant cost savings and environmental benefits compared with conventional approaches that require more offshore installations and infrastructure.

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The LTDP-1 project is an island-based concept aimed at ramping up Lower Zakum’s output to 520,000 barrels per day of oil, as the country aims to boost its total production capacity to 5 million bpd by 2027.

Field operator Adnoc recently sought interest from local and international contractors for work worth potentially $3 billion for the first phase of the Lower Zakum LTDP.

“This contract award for the construction of artificial island ‘G’ exemplifies our strategy to tap into new growth areas, showcasing the expanding range of services we offer to our customers and the trust that Adnoc Offshore has placed in us as their partner of choice,” Adnoc L&S chief executive Abdulkareem Al Masabi said.

“Capitalising on our project management expertise, end-to-end logistics solutions, and strategic partnerships, Adnoc L&S is primed to execute major offshore EPC contracts that support our customers’ ambitious growth plans and deliver value to our shareholders.”

Ebitda growth target

The provision of EPC services in the integrated logistics business is a new offering by Adnoc L&S in line with its announced strategy to achieve significant ongoing growth, including expansion into new verticals.

The EPC market is expected to experience substantial growth in the region in the coming years. The company aims to offer a broader range of services to its customers while facilitating the growth of Adnoc’s upstream and downstream operations.

Adnoc L&S said is targeting an average annual earnings before interest, taxes, depreciation, and amortisation growth in the low teens over the medium term. This growth will be driven by new contract awards, further expansion of its integrated logistics services platform and optimised redeployment of jack-up barges.