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UAE’s ADNOC Drilling Awarded $2 Billion Worth Contracts

The Salama drilling rig operates within a total of 115 rigs to enhance the production operations of ADNOC. (Asharq Al-Awsat)
The Salama drilling rig operates within a total of 115 rigs to enhance the production operations of ADNOC. (Asharq Al-Awsat)
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UAE’s ADNOC Drilling Awarded $2 Billion Worth Contracts

The Salama drilling rig operates within a total of 115 rigs to enhance the production operations of ADNOC. (Asharq Al-Awsat)
The Salama drilling rig operates within a total of 115 rigs to enhance the production operations of ADNOC. (Asharq Al-Awsat)

UAE’s ADNOC Drilling confirmed being awarded five 10-year contracts, totaling 7 billion dirhams ($2 billion), in support of ADNOC Offshore’s growing drilling operations.

The rigs will commence activity progressively from the end of 2023, with significant revenue expected in 2024 and the first full-year revenue contribution from 2025. The revenue associated with these contracts is included in the Company’s full-year 2023 and medium-term guidance.

“We are pleased to have been awarded these important contracts. Long-term contracts like these are the backbone of our business model, providing a clear line of sight on future earnings,” said Chief Executive Officer of ADNOC Drilling Abdulrahman Al Seiari.

“As we continue to grow our fleet, our shareholders will benefit from the opportunity to be directly invested in ADNOC’s accelerated production capacity growth, which is driving faster revenue growth and progressive, long-term shareholder returns while responding to the world’s rising energy demand.”

The five rigs have been acquired as part of the company’s fast-tracked rig fleet expansion program, designed to enable the delivery of ADNOC’s accelerated production capacity growth to responsibly meet rising global energy demand.

The new rigs will be among the most capable, high-specification rigs working in the Arabian Gulf.

Each of the five rigs will be equipped with a battery energy storage system to increase efficiency and reduce emissions. The hybrid power technology system stores energy in its batteries to use when there is a need for continuous power or to provide instant extra power when there is an increase in demand.

The new rigs are central to ADNOC Drilling’s rigorous decarbonization strategy and the company’s commitment to supporting ADNOC’s target to reduce greenhouse gas intensity by 25% by 2030, as well as the UAE Net Zero by 2050 strategic initiative.

The 7 billion dirhams ($2 billion) contract award follows more than 42.23 billion ($11.5 billion) in long-term contracts announced since the beginning of 2022.

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China Launches Late Stimulus Push to Meet 2024 Growth Target

FILE PHOTO: A worker works on a building under construction in Beijing's Central Business District (CBD), China July 14, 2024. REUTERS/Tingshu Wang/File Photo
FILE PHOTO: A worker works on a building under construction in Beijing's Central Business District (CBD), China July 14, 2024. REUTERS/Tingshu Wang/File Photo
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China Launches Late Stimulus Push to Meet 2024 Growth Target

FILE PHOTO: A worker works on a building under construction in Beijing's Central Business District (CBD), China July 14, 2024. REUTERS/Tingshu Wang/File Photo
FILE PHOTO: A worker works on a building under construction in Beijing's Central Business District (CBD), China July 14, 2024. REUTERS/Tingshu Wang/File Photo

China's central bank on Friday lowered interest rates and injected liquidity into the banking system as Beijing assembled a last-ditch stimulus assault to pull economic growth back towards this year's roughly 5% target, Reuters reported.
More fiscal measures are expected to be announced before China's week-long holidays starting on Oct. 1, after a meeting of the Communist Party's top leaders showed an increased sense of urgency about mounting economic headwinds.
On the heels of the Politburo huddle, China plans to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year as part of fresh fiscal stimulus, two sources with knowledge of the matter have told Reuters.
Capital Economics chief Asia Economist Mark Williams estimates the package "would lift annual output by 0.4% relative to what it would otherwise have been."
"It's late in the year, but a new package of this size that was implemented soon should be enough to deliver growth in line with the 'around 5%' target," he said.
Chinese stocks are on track for the best week since 2008 on stimulus expectations.
The world's second-largest economy faces strong deflationary pressures due to a sharp property market downturn and frail consumer confidence, which have exposed its over-reliance on exports in an increasingly tense global trade environment.
A wide range of economic data in recent months has missed forecasts, raising concerns among economists that the growth target was at risk and that a longer-term structural slowdown could be in play.
On Friday, data showed industrial profits swinging back to a sharp contraction in August.
"We believe the persistent growth weakness has hit policymakers' pain threshold," Goldman Sachs analysts said in a note.
As flagged on Tuesday by Governor Pan Gongsheng, the People's Bank of China on Friday trimmed the amount of cash that banks must hold as reserves, known as the reserve requirement ratio (RRR), by 50 basis points, the second such reduction this year.
The move is expected to release 1 trillion yuan ($142.5 billion) in liquidity into the banking system and was accompanied by a cut in the benchmark interest rate on seven-day reverse repurchase agreements by 20 bps to 1.50%. The cuts take effect on Friday and Pan, in rare forward-looking remarks, left the door open to another RRR reduction later this year.

Given weak credit demand from households and businesses, investors are more focused on the fiscal measures that are widely expected to be announced in coming days.
Reuters reported on Thursday that 1 trillion yuan due to be raised via special bonds will be used to increase subsidies for a consumer goods replacement program and for the upgrade of large-scale business equipment.
They will also be used to provide a monthly allowance of about 800 yuan, or $114, per child to all households with two or more children, excluding the first child.
China aims to raise another 1 trillion yuan via a separate special sovereign debt issuance to help local governments tackle their debt problems.
Bloomberg News reported on Thursday that China is also considering the injection up to 1 trillion yuan of capital into its biggest state banks.
Most of China's fiscal stimulus still goes into investment, but returns are dwindling and the spending has saddled local governments with $13 trillion in debt.
The looming fiscal measures would mark a slight shift towards stimulating consumption, a direction Beijing has said for more than a decade that it wants to take but has made little progress on.
China's household spending is less than 40% of annual economic output, some 20 percentage points below the global average. Investment, by comparison, is 20 points above but has been fueling much more debt than growth.
The politburo also pledged to stabilize the troubled real estate market, saying the government should expand a white list of housing projects that can receive further financing and revitalize idle land.
The September meeting is not usually a forum for discussing the economy, which suggests growing anxiety among officials.
"The 'shock and awe' strategy could be meant to jumpstart the markets and boost confidence," Nomura analysts said in a note.
"But eventually it is still necessary for Beijing to introduce well thought policies to address many of the deep-rooted problems, particularly regarding how to stabilize the property sector."