ADNOC cancels Petrofac’s Dalma contract worth $1.5 billion

Oilfield services provider Petrofac has received a contract termination from ADNOC for the Dalma gas development project in the United Arab Emirates.

The contract was for the engineering, procurement (including novated long lead items), construction, transportation, offshore installation and commissioning contracts are for the Dalma project.

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.

Petrofac said on Thursday that its Petrofac Emirates joint venture had received notice of termination from ADNOC of two recently awarded contracts for the Dalma gas development project.

The project, worth around $1.65 billion, and awarded in February 2020, comprised two packages. Petrofac Emirates’ portion of the scope of work is valued at $1.5 billion.

Petrofac stated it is committed to working with ADNOC over the coming weeks to explore alternative options to deliver this project in a way that supports their strategic objectives within the current challenging environment.

Petrofac continues to progress execution of its remaining group backlog of around $7 billion as planned and is still progressing with tendering for major contracts in Abu Dhabi. However, it anticipates this development may have an impact on the timing of their awards, the company concluded.