Petrofac said two recently awarded contracts worth $1.65 billion to its Petrofac Emirates joint venture (JV) for the Dalma gas development project were terminated by Abu Dhabi National Oil Company (ADNOC).
The decision by ADNOC was in line with a letter obtained by Reuters in March that notified contractors and suppliers of the company’s plan to review existing deals to find ways to cut costs due to the steep slide in oil prices.
The two contracts were awarded in February for engineering, procurement, construction, transportation, offshore installation, and commissioning for the Dalma project. The work scope encompassed offshore packages at Arzanah island and surrounding offshore fields, located around 140 km off the north-west coast of the Emirate of Abu Dhabi.
The Dalma project is a key part of the Ghasha ultrasour gas concession which is central to ADNOC’s strategic objective of enabling gas self-sufficiency for the UAE.
Petrofac said it will work with ADNOC over the coming weeks to explore alternative options for continuing work in the current environment. The company will execute its remaining group backlog of around $7 billion as planned and is progressing with tendering for major contracts in Abu Dhabi.
However, this latest development may have an impact on the timing of these awards.