Exclusive: ADNOC upstream executive director on digitalisation, foreign partnerships, and localisation for Ghasha

Ghasha will produce more than 1.5bn standard cubic feet of gas, and is a critical part of ADNOC's plans to turn the UAE towards gas self-sufficiency

Abdulmunim Al Kindy, upstream executive director at ADNOC Group
Abdulmunim Al Kindy, upstream executive director at ADNOC Group

The oil & gas business has changed. Upstream leaders often talk about this multi-tiered transformation—the Middle East’s oil and gas companies must leverage cleaner fuels, promote sustainable practices, embrace digital technology, and open up to the world. One year ago, at the 2018 edition of the Abu Dhabi International Petroleum Exhibition & Conference, ADNOC Group CEO Dr. Sultan Al Jaber termed it ‘Oil & Gas 4.0’.

This was rather appropriately followed by a slew of deals surrounding digital technology, natural gas, and partnerships which brought international oil and gas companies into the United Arab Emirates through Abu Dhabi’s first competitive exploration licensing round.

However, despite the industry’s shared transformation, only a handful of projects could illustrate the priorities, opportunities, and challenges facing the Middle East upstream segment as well as ADNOC Group’s Ghasha concession, which appears to have merged nearly all relevant  industry trends and transformations into a single initiative.

Ghasha concession, made up of three offshore developments—Hail, Ghasha, and Dalma—will produce more than 1.5bn standard cubic feet (scf) of gas. ADNOC Group’s upstream executive director, Abdulmunim Saif Al Kindy, estimates that Ghasha could meet approximately 20% of the UAE’s gas demand by the second half of the 2020s.

With the UAE’s gas demand continuing to rise, these resources ensure that ADNOC can reliably support the country’s future supply needs and growth,” Al Kindy says. “At the same time, we remain strictly cost focused—particularly as far as more complex gas is concerned—and drive efficiencies, smart and remote technologies and leverage strategic and value-adding partnerships, all of which can be seen in the mega Ghasha development.”

The UAE’s integrated gas strategy would push the nation towards gas self-sufficiency, potentially transforming it into a net exporter of gas. “One of ADNOC’s strategic imperatives is to create a more sustainable and economic gas supply,” Al Kindy says. “For that, we are developing new gas fields ranging from sour gas to gas cap development, to unconventional gas and, of course, to harnessing the future potential of Abu Dhabi exploration blocks for which block bid round 2 has been started earlier this year.”

While oil has generally overshadowed gas in the global energy mix, analysts suggest that this is changing. DNV GL’s 2018 Energy Transition Outlook predicts that gas will overtake oil as the world’s primary energy source in 2026, and will account for 25% of the world’s energy by 2050.  “Gas will fuel the energy transition in the lead-up to mid-century. It sets a pathway for the increasing uptake of renewable energy, while safeguarding the secure supply of affordable energy that the world will need during the energy transition,” Liv A. Hovem, CEO of DNV GL Oil & Gas, writes in the report.

Andy Brogan, EY’s global oil and gas leader, said on the sidelines of the World Energy Congress 2019 in Abu Dhabi that natural gas will likely have a bright future for at least 25 more years, noting its important role as a cleaner hydrocarbon, bridging the gap between traditional fuels and clean & renewable energy. “There is no technologically viable alternative to natural gas to substitute coal, at scale, quickly,” Brogan says, explaining why natural gas would continue to be necessary in the future. “And more to the point, quite a few of the big consuming countries seem to have recently made a policy decision to have natural gas in their energy mix.” Crucially, if gas is increasingly used for domestic power generation, that leaves more valuable crude to be exported, a boon to producers’ sustainability targets as well as their bottom line.

Much of the UAE’s gas resources are sour, requiring specific, and costly, equipment and techniques due to high concentrations of H2S, but ultimately derive sulphur from produced gas in the downstream process, providing another revenue stream for ADNOC, with global demand for sulphur at 270mn tonnes per annum. “The UAE is currently the fourth largest sulphur producer, contributing approximately 11% of global production,” says Angie Slavens, managing director of UniverSUL consulting. Most of that comes from sour gas processing facilities for Shah and Habshan.

While the region’s national oil companies have traditionally been closed off to foreign participation—in part thanks to their vast resources, infrastructure, and knowledge base—they have opened up considerably. ADNOC made history when its awarded stakes in its onshore and offshore concessions as part of its first competitive licensing round.

ADNOC’s partners for Ghasha hold a combined 45% stake in the concession—Italy’s Eni (25% stake), Germany’s Wintershall (10%), Russia’s Lukoil (5%), and Austria’s OMV (5%) are all part of the development. ADNOC also signed a framework agreement with Lukoil and the Russian Direct Investment Fund to explore future collaboration on Ghasha.

As far as upstream is concerned, our strategic partnerships are focused on technologies and capabilities, market access or capital and help us optimise cost and ensure ADNOC extracts the maximum value from Abu Dhabi’s gas resources,” Al Kindy says, noting that ADNOC Group’s approach to partnerships gives it a competitive edge, and ultimately seeks to enhance performance and returns on the company’s assets and capital, drive added value across the business, and accelerate its access to “the most attractive parts of the energy value chain.”

However, like other NOCs in the region, ADNOC is simultaneously trying to cultivate foreign partnerships while boosting the local supply chain and talent pool. It awarded UAE-based National Marine Dredging Company (NMDC) a $1.36bn contract to construct 10 artificial islands and two causeways for the first phase of development for the Ghasha concession. Approximately $1bn of the total will flow back into the UAE through NMDC’s use of local talent, suppliers, manufacturers, and materials. “This mega-project is a key enabler of ADNOC’s In-Country Value Program, which is aimed at nurturing new local and international partnerships and business opportunities, catalysing socio-economic growth and creating job opportunities for UAE nationals,” Al Kindy says.

ADNOC spearheaded the use of artificial islands, which Al Kindy says contribute lower costs over time by using land-drilling rigs instead of offshore jack-up drilling rigs. “As we work on increasing gas production through this development, it is important that we carefully manage the cost of the operations, improve our operational efficiency and save costly offshore and drilling infrastructure,” he adds. Construction on the islands is underway—The Environment Agency-Abu Dhabi has approved construction in the Marawah marine protected area. Al Kindy says six of islands are currently under construction: Jazool, Ghananiz, Duroob, Swalem, Gadd and Mudaifena.

ADNOC Group has completed the project front-end engineering design, issued all five Hail and Ghasha EPC packages, as well as three long lead items, to the market, and awarded the main automation contractor agreement for Hail, Ghasha, and Dalma. “The oil and gas industry’s largest combined front-end engineering design contracts have already been completed, simultaneously with contracts for construction of artificial islands, appraisal, and development drilling,” Al Kindy says. “All of these activities have contributed to shorten project development & construction time, without compromising quality or safety.”

ADNOC Group has earned a reputation for being digital-forward under Sultan Al Jaber’s leadership, and the Ghasha concession will follow that trend by leveraging advances in digital technology to aim for smarter production. “The digital approach we take optimises work procedures and efficiencies, strengthens data integration, enhances safety and boosts environmental preservation,” Al Kindy says. “Also, it improves real-time decision-making, from subsurface to drill centers and to ground facilities.” He sees the benefit of digitalisation in centralising operations—all of the Ghasha concession’s remote facilities will be operated from one control centre in Al Manayif, which could speed up responses to incidents that require intervention.

This central control room will be one of the largest automation control systems in the Middle East, controlling all offshore and onshore operations from one location handling information from more than 100,000+ analogue/digital inputs/outputs,” he says. “All offshore operations will also be fully digitalised and 100% unmanned, achieved through high-tech sensors, drones, rail cameras, and surveillance robots.”

He noted that Ghasha would be the first oil and gas project to rely solely on surveillance robots for all offshore operations, which would be microchipped and monitored at the control centre. That may seem like science fiction, but it might not be so far off—ADNOC already monitors all of its 14 operating companies from its Panorama Command Centre, which provides a constant flow of information to a 50 metre wide screen at its headquarters. 

When translated into real life, Ghasha might not perfectly realise the ideal of a digitally-enabled, sustainable, localised, partnership-driven project. Still, it is the product of an industry in transformation, and ADNOC appears to be ticking off as many boxes as possible to modernise its projects, and to leverage the sweet advantages that come with its lofty reserves of sour gas.


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