ADNOC taps France's Vallourec for 'mega tender'
Vallourec beat out competitors including Nippon Steel, GSC and Tenaris for the commodity steel tube products, and players including Jubail Energy Services Company (JESCO) of Saudi Arabia, China's TPCO and TMK of Russia for the specialised products
The Abu Dhabi National Oil Company (ADNOC) has picked Vallourec to supply steel tubing to its three main operating companies.
According to a report, the French company beat out a large field of competitors to win Abu Dhabi’s first centralised ‘mega tender’.
The tender is the first to group together ADNOC’s three main operating companies amid the parent company’s drive to improve efficiency and push down costs following the oil price crash.
“What we know is that ADNOC pushed the opcos to standardise their requests," said Bertrand de Rotalier, Vallourec’s Dubai-based vice president for the Middle East. “It is clear that for many of the wells there are common items. You can have much bigger volumes, and then there are additional special items for each of the companies."
Vallourec beat out competitors including Nippon Steel, GSC and Tenaris for the commodity steel tube products, and players including Jubail Energy Services Company (JESCO) of Saudi Arabia, China’s TPCO and TMK of Russia for the specialised products. The deal is to supply 100,000 tonnes of oil country tubular goods (OCTG) for the three years through 2018, covering commodity and specialised products.
ADNOC is one of the oil and gas world’s biggest spenders and has a five-year programme to invest – with its partners – up to $25bn to develop both onshore and offshore oilfields to boost production by 700,000 barrels per day (bpd), to 3.5mn bpd, by 2018.
The major onshore oilfields are operated by the Abu Dhabi Company for Onshore Petroleum Operations (ADCO), which is 60% owned by ADNOC, with France’s Total accounting for 10% and smaller shares by Japan’s Inpex and GS Energy of Korea.
The two major offshore consortiums, ADMA-OPCO and ¬ZADCO are in partnership, respectively, with BP, Total and JODCO of Japan on the one hand, and ExxonMobil and JODCO on the other.
Last month, the appointment of a new chief executive at ADNOC, Sultan Al Jaber, was thought to be part of a broader shake-up of Abu Dhabi civil service and government-related entities (GREs) leadership with a mandate to drive efficiency in a low-oil-price environment.
The pooled procurement for ADNOC, the emirate’s biggest spender, ‘makes total sense from a business standpoint as long as you have some standardised items and a global contract with big volume’, de Rotalier said.
“They are modernising and taking a ‘sourcing’ approach to business and I’m sure there are many more opportunities in future," he added. “This tender was managed by ADMA-OPCO for all three and probably they’ve decided it is going to be rotating."
Vallourec did not put a monetary value on the contract, but OCTG contracts of such size would be in the hundreds of millions of dollars.
It is worth noting that Ali Al Jarwan, chief executive officer of ADMA-OPCO, in November had said: “We are targeting 15 to 20% cuts in operating expenses to take advantage of market conditions".