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ADNOC Invests $318 Million to Connect Smart Wells at BU Hasa Oilfield

The Bu Hasa asset is located 200 kilometers south of Abu Dhabi city. It is one of ADNOC’s oldest oil fields that have been producing since 1965. - WAM
The Bu Hasa asset is located 200 kilometers south of Abu Dhabi city. It is one of ADNOC’s oldest oil fields that have been producing since 1965. - WAM
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ADNOC Invests $318 Million to Connect Smart Wells at BU Hasa Oilfield

The Bu Hasa asset is located 200 kilometers south of Abu Dhabi city. It is one of ADNOC’s oldest oil fields that have been producing since 1965. - WAM
The Bu Hasa asset is located 200 kilometers south of Abu Dhabi city. It is one of ADNOC’s oldest oil fields that have been producing since 1965. - WAM

The Abu Dhabi National Oil Company (ADNOC) announced Tuesday the details of an investment worth to $318 million (AED1.16 billion) to connect newly drilled smart wells to the main production facilities at Bu Hasa, which will sustain production capacity of 650,000 barrels per day (bpd) at ADNOC’s largest onshore asset.

The engineering, procurement and construction (EPC) contract has been awarded in two packages by ADNOC’s subsidiary, ADNOC Onshore, state news agency WAM reported.

The first package is valued at up to $158.6 million (AED582 million) and has been awarded to China Petroleum Pipeline Engineering Co. Ltd, while the second, with a value of up to $159.1 million (AED 583.9 million) - has been awarded to Robt Stone (ME) LLC.

The contracts's duration is up to three years, with the option of a two-year extension.

In this regard, Yaser Saeed Almazrouei, ADNOC Upstream Executive Director, said: "This EPC award demonstrates how ADNOC is leveraging advanced technologies, such as smart wells with state-of-the-art remote capabilities, to drive higher performance from our assets and resources, and to generate additional value."

"The award underpins our strategic objectives to expand production capacity and create a more profitable upstream business with over half of the contract value flowing back into the UAE’s economy, supporting local businesses and stimulating economic growth."

According to WAM, the EPC contract will see up to 260 conventional and non-conventional smart wells installed, which enable remote operations. The installed tie-ins will be different from traditional tie-ins previously used by ADNOC Onshore, as the contractors will procure all required equipment on an upfront basis allowing for faster construction and well hand-over.

In 2018, ADNOC awarded a contract for the Bu Hasa Integrated Field Development Project (BUIFDP) to increase the production capacity of the asset to 650,000 bpd and sustain long-term production as part of its strategy to expand its crude oil production capacity to 5 million bpd by 2030. This new award builds on the substantial progress made to date and will enable ADNOC Onshore to unlock greater value from the asset.

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Dollar Mauled by Trump Trade War

A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo
A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo
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Dollar Mauled by Trump Trade War

A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo
A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo

The dollar hit three-month lows on Wednesday as the US' trade war with its partners escalated, while a major overhaul to German government borrowing triggered the biggest sell-off in the country's debt since the late 1990s.

In addition to the cocktail of tariffs and a seismic shift in German fiscal policy, investors also scrutinized the start of China's annual sessions of its parliament, the National People's Congress, at which Beijing retained a goal of roughly 5% economic growth for 2025.

The euro hit its highest in four months, while European stocks surged. The biggest casualties were longer-dated German government bonds, caught up in their worst one-day selloff in more than 25 years as yields ripped higher, Reuters reported.

Overnight, German political parties agreed to a 500 billion-euro ($534.75 billion) infrastructure fund and, crucially, an overhaul in borrowing limits that economists billed as "a really big bazooka".

"Last night Germany announced plans for one of the largest fiscal regime shifts in post-war history, perhaps with reunification 35 years ago being the only rival," Deutsche Bank strategist Jim Reid said.

"Everything you thought you knew about Germany's economic prospects three months ago, or even three weeks ago, should be ripped up and you should start your analysis from fresh," he said.

German 30-year yields - the rate the government pays to borrow over the very long term - rose by almost a quarter of a percentage point in early trading, on track for their largest rise since October 1998.

The 30-year bond yield was last up 20 basis points at 3.03%.

"It’s a recognition that something has changed. Germany is the benchmark against which all these other markets are measured. And so this big transition in German fiscal policy is significant," Dario Perkins, managing director, global macro at TS Lombard, said.

"We’re a long way away from worrying about German fiscal problems. People have been pleading that Germany spends for the last 20 years."

Longer-dated yields elsewhere rose too, with French 30-year rates up 15 basis points at 4.0% and Italian 30-year bonds yielding 4.517%, up 17 bps.

Europe's STOXX 600 jumped by more than 1.2% to record highs. The prospect of a meaningful increase in European spending on security has sent the region's defence stocks soaring this month.

 

TRADE WAR INCOMING

 

US tariffs on imports from Canada, Mexico and China went into effect on Tuesday, when President Donald Trump also delivered his State of the Union address, in which he touted his successes since taking office six weeks ago.

Canada and China retaliated immediately, while Mexican President Claudia Sheinbaum vowed to respond likewise, without giving details.

With a full-on trade war underway, crude oil hit six-month lows, while bitcoin found its feet around $87,800 following a volatile week.

"Fears about weaker US and global economic activity are manifesting in the markets, with cyclicals driving the sell-off," said Kyle Rodda, senior financial markets analyst at Capital.com.

In China, the offshore yuan was a touch weaker at 7.2629, having staged its biggest one-day rally the previous session since Trump's inauguration as investors ditched the dollar.

Along with its unchanged economic growth target, Beijing committed more fiscal resources than last year to mitigate the impact of rising US tariffs.

China aims for a budget deficit of about 4% of gross domestic product in 2025, up from 3% in 2024.

Overnight, the US S&P 500 slid 1.2%, but futures rose 0.7% on Wednesday.

The US dollar index tumbled 0.5% to 105.03, bringing its losses over the last three days to 2.3%, the most in this timeframe since late 2022.

In the ascendant was the euro, which rose 0.6% to $1.0693, the most since mid-November, prompting a flurry of bullish forecasts from major investment banks.

Oil fell for a third day on Wednesday, under pressure from concern over energy demand as tit-for-tat tariffs ramp up and from OPEC+ plans to raise output in April.

Brent futures fell 1.3% to $70.09 a barrel, having hit $69.75 the previous day, the lowest since September.