Adnoc awards $510m contract to Saipem to expand capacity at Shah gas plant

Abu Dhabi National Oil Company awarded a $510 million contract to Italy's Saipem to expand production capacity at the Shah sour gas plant, as the UAE looks to increase its output of gas by 2030.

Adnoc Sour Gas, a subsidiary of the national oil company and a joint venture between Adnoc and US energy player Occidental, awarded the contract to Saipem after a competitive tender process, the company said in statement.

The contract will increase gas processing capacity at the Shah gas plant by 13 per cent to 1.45 billion cubic feet per day from 1.28 bcf/d by 2023 and supports Adnoc’s objective of enabling gas self-sufficiency for the UAE. The Shah gas plant meets 12 per cent of the UAE's total supply of natural gas.

The plant processes ultra sour gas, which refers to highly sulphurous fuel, which needs to be refined before use. The Shah gas plant processes 1 bcf/d of ultra sour gas and accounts for around 5 per cent of the world's granulated sulphur, which is a byproduct of the refining.

"Shah’s expansion will optimise the plant as well as improve both capacity and higher-end product recoveries, further growing our contribution as a safe and reliable supplier of gas to Adnoc and the UAE," said Tayba Al Hashemi, chief executive at Adnoc Sour Gas.

Adnoc Sour Gas covers upstream, midstream, and downstream activities. It operates the Shah field and is the only company in the world that processes more than 1 bcf per day of ultra-sour gas from a single gas plant, which also produces approximately 5 per cent of the world’s granulated sulfur.

The latest addition is a 145 per cent cumulative expansion of the plant, which became operational in 2015.

The UAE consumes around 7.4 bcf of gas per day largely to meet power demand, with the total share of imported fuel at 30 per cent, according to estimates by energy consultancy FGE.

The scope of the development work at the Shah gas plant includes engineering, procurement, construction, pre-commissioning, commissioning, and start-up of facilities to increase plant production capacity.

The Italian company will also extend existing gas gathering network and new pad facilities.

“This strategic Shah gas expansion project is an excellent example of how Adnoc is growing its gas production at existing fields to deliver more gas supply and support the UAE’s gas self-sufficiency objective," Yaser Almazrouei, Adnoc's upstream executive director, said.

Around 50 per cent of the value of the contract awarded to Saipem will flow back to the UAE economy under Adnoc's in-country value programme.

"The in-country value generated from the EPC contract award will help to stimulate the growth of the private sector and local economy as we navigate the post-Covid recovery," Mr Almazrouei added.

Saipem will also develop associated off-sites and utilities needed to integrate the new facilities with existing installations.

All products from the Shah gas plant are delivered to the Adnoc Group for further processing and distribution. However, the granulated sulphur byproduct is transported by rail to Adnoc's downstream hub in Ruwais for export.