ADNOC Gas announced Monday it awarded engineering, procurement, and construction (EPC) contracts worth $550 million (AED 2 billion) for the fourth phase of UAE's gas pipeline network enhancement (ESTIDAMA) project, a bourse filing showed.
The EPC contracts were awarded to NMDC Energy PJSC and Galfar Engineering and Contracting WLL Emirates, according to the filing submitted to the Abu Dhabi Securities Exchange (ADX).
In a separate filing on ADX on Monday, NMDC Energy announced securing a $254.6 million contract for the project.
The ESTIDAMA project will extend the UAE’s natural gas pipeline network operated by ADNOC Gas by 300 kilometers to over 3,500 kilometers, from about 3,200 kilometers, enabling the transportation of higher volumes of natural gas to customers in the Northern Emirates of the UAE.
The UAE-based company said that approximately 70% of contract value would flow back into the Gulf country's economy through ADNOC’s in-country value (ICV) program. The ICV program, launched by ADNOC in 2018, is an initiative designed to achieve the optimum value from the UAE's oil and gas resources.
ADNOC Gas ranks 12th on Forbes Middle East's list of Top 100 Listed Companies 2024.
“This award supports the ongoing expansion of the UAE’s gas pipeline network, which will bring lower-cost and sustainable natural gas to more locations across the country," said Ahmed Alebri, CEO of ADNOC Gas, in the statement.
“We are proud to play a leading role in meeting the growing demand for gas across the country and enabling the UAE’s goal of gas self-sufficiency.”
ADNOC Gas also said Monday that it is transferring ownership of the $2.4 billion UAE gas pipeline expansion project, ESTIDAMA, to ADNOC, optimizing its capital efficiency.
Following the ownership transfer, ADNOC Gas will continue to operate and maintain the pipeline network, utilizing its expertise in construction and pipeline operations. ADNOC will finance the capital expenditures for this crucial infrastructure project.
"With the transfer of ownership of the ESTIDAMA Project to ADNOC, ADNOC Gas will continue to benefit from the expansion of the pipeline networks, while improving our capital efficiency to ensure that we maximize value for our shareholders," Alebri noted.
ADNOC Gas will further expand its domestic operations through the pipeline network, paying ADNOC a variable transmission fee based on the actual throughput of the pipeline. ADNOC Gas will receive compensation for operating and maintaining the project on behalf of ADNOC.
ADNOC is implementing a robust gas strategy that includes building a state-of-the-art pipeline network connecting all parts of the UAE to ensure a sustainable and cost-effective supply of natural gas to meet local demand.
The pipeline project consists of multiple phases valued at $2.4 billion. The first contract, awarded in 2021 and completed by 2023, focused on early modifications to existing pipelines.
In July 2023, ADNOC awarded the second and third ESTIDAMA EPC contracts worth $1.34 billion. These contracts involve constructing new pipelines and a gas compression plant at ADNOC’s Habshan complex, facilitating the delivery of crucial feed gas to key customers across the UAE.
Last year, NMDC Energy, in a consortium with C.A.T. International Ltd., secured a contract on the earlier phase of the Estidama project valued at over $600 million. The contract included the installation of 191 km of new sales gas pipelines, along with additional infrastructure such as nitrogen and water pipelines and a jump-over connection, the company said.
ADNOC Gas plans to invest over $13 billion in domestic and international expansion opportunities between 2024 and 2028, with its stable-margin business projected to increase earnings before interest, taxes, depreciation,n and amortization (EBITDA) by up to 40% during this period, according to the statement.
