Petrofac, the London-based oil and gas services company, said it would be reimbursed by Abu Dhabi National Oil Company for all costs incurred after the cancellation of two contracts worth US$1.5 billion for the Dalma natural gas project.
Petrofac received a notice of termination in April 2020 from ADNOC, whose ADGAS subsidiary exports LNG from the Das Island plant offshore Abu Dhabi in the United Arab Emirates.
The work scope of Dalma Gas Development encompassed offshore packages at Arzanah Island and surrounding offshore fields, located around 140 kilometres off the northwest coast of the Emirate of Abu Dhabi. The first package was valued at $1.065Bln was for gas processing facilities at Arzanah Island.
“The Dalma project, which was awarded in February 2020, was subsequently terminated by ADNOC in following the collapse of global oil prices. Under the contract, Petrofac will be reimbursed for all costs incurred,” said Petrofac.
The Dalma project is a key part of the Ghasha ultra-sour gas concession which is central to ADNOC’s strategic objective of enabling gas self-sufficiency for the UAE.
The UAE is the oldest LNG producer in the Middle East from its Das Island plant offshore Abu Dhabi consisting of three Trains with nominal capacity of 5.5 million tonnes of LNG per annum.
Petrofac was established in the UAE in 1991 and has operational centres in Abu Dhabi and Sharjah. It has previously executed 11 major EPC projects in-country to date.
The reimbursement deal with by ADNOC was confirmed in the company’s last business update before its next earnings statement scheduled for August 2020.
“Engineering and Construction financial performance for the first six months of 2020 has been significantly impacted by the deterioration in market conditions,” said Petrofac.
The company’s order backlog was US$6.4Bln at the end of May 2020 compared with $7.4Bln at the end of December 2019.
“First half revenues are expected to be around US$1.6Bln, driven by Covid-19 related project delays,” it added.
“Activity on our lump-sum projects in Iraq and India was suspended in response to Government-enforced lockdowns,” stated Petrofac.
“Elsewhere, progress has been materially impaired due to stringent health protocols, supply chain disruption and travel restrictions,” it said.