Petrofac wins $600m contract with UAE oil giant ADNOC

Petrofac has won another mega contract from the UAE’s state oil giant to supply equipment for a major carbon capture program in the Middle East.

Abu Dhabi National Oil Company (ADNOC) has awarded the London-based energy services company a $600m (£497m) deal to supply carbon capture units, pipeline infrastructure and several storage wells.

The technology will be supplied to the Habshan Carbon Capture, Utilization and Storage (CCUS) project, located approximately 150 kilometers southwest of Abu Dhabi.

It is the second major contract Petrofac has won from the company in 2023, after being awarded a £555 million deal at the end of June for construction work on a new gas compressor factory.

Petrofac won a further two contracts from the company last year for brownfield work and a two-year extension for field maintenance services at the Haliba oil field.

The latest deal with ADNOC coincides with the ADIPEC conference in Abu Dhabi, a major exhibition for the global energy industry, and comes two months before Dubai hosts the COP28 climate summit.

The investment by ADNOC, one of the world’s largest oil producers, in CCUS programs is part of its goal to achieve net zero emissions from its operations by 2045, five years earlier than the previous target.

The government-run company predicts that the Habshan project, once fully operational, will capture and store up to 1.5 million tons of CO2 underground per year and triple its total carbon capture capacity to 2.3 million tons per year.

Tareq Kawash, CEO of Petrofac, said: “By accelerating plans to make energy cleaner, the UAE is investing in its future.

‘We look forward to combining our CCUS expertise and project delivery experience in the UAE to support ADNOC Gas in achieving their decarbonisation plans, maximizing energy production and minimizing emissions, and helping to support the energy transition of the UAE.”

Petrofac shares were 0.7 percent lower at 72.35p on Tuesday afternoon. They remain significantly below their pre-Covid levels, partly because sales have been declining for years in a row.

Petrofac’s reputation has also been badly damaged by revelations that the group’s senior managers paid bribes to win multi-billion pound contracts in the UAE, Iraq and Saudi Arabia.

As a result of the scandal, the company found it more difficult to find work in the Middle East and was briefly banned from applying for ADNOC contracts.

Although the company has built up a large backlog of work over the past year, it is still struggling to grow sales and make a profit.

It posted a net loss of £165m in the first six months of 2023 after its engineering and construction division was hit by write-offs on old contracts.