KCA Deutag Energy wins $550m PDO drilling contract

Muscat: Leading international drilling, engineering and technology firm KCA Deutag Energy says it has won a 10-year contract from Petroleum Development Oman (PDO) for the provision of drilling services with four new highly automated rigs that will be built in the Sultanate of Oman.

The ten-year contract comes with options to extend for a further two years and, with those options included, has a total value around $550m.

The innovative rigs will be constructed by International Drilling Technology Co (IDTEC) in the Sultanate Oman. IDTEC, majority owned by the KCA Deutag Group, is the group's local rig manufacturing and servicing company, which has already acquired the necessary expertise and certifications for rig construction. The technologically advanced rigs will be the first of their kind to be constructed in the Sultanate of Oman, marking a step change in the rig building capabilities in country.

KCA Deutag Energy LLC will invest approximately $100m to build the new rigs in the Sultanate of Oman and expects to commence operations in the second half of 2023. Around 40 per cent of this value will be spent with Omani suppliers, including local small and medium enterprise (SME) companies.

The project has high In-Country Value (ICV) and will provide many benefits to the local economy and community including:

Securing employment for existing and additional resources at IDTEC across the 18-month build period.

Subcontracting of significant work including machining, construction and commissioning to Omani SMEs.

Establishment of IDTEC as an American Petroleum Institute (API) licensed manufacturer for rig structures in the Sultanate of Oman, with long-term opportunities for skilled jobs to support this and future projects.

Training and upskilling of Omani personnel during the construction phase. This includes building skills of, and transfer of knowledge to, Omani personnel - focusing on engineering, operation and maintenance of mechanised and automated rigs to achieve 100 per cent Omani crews after four years of operation.

The ICV benefits will continue throughout the life of the contract, securing employment for approximately 190 jobs. The rig design and all key components will be provided by KCA Deutag's new business unit, Kenera, through its Bentec engineering and manufacturing centre. The modern rigs will be highly automated, fast-moving units designed for safe and efficient drilling operations in well-established Omani fields and will benefit from the latest technologies from KCA Deutag's Well of Innovation.

Mohammed al Rashdi, PDO Well Engineering Director, said: "Awarding this contract to KCA Deutag Energy LLC is a key step in establishing local rig manufacturing capabilities, especially for mechanised rigs capitalizing on PDO journey to modernize its rigs fleet. This will also come with an opportunity to train and develop local Omanis in the design and manufacture of mechanised rigs, in addition, to supporting Omani SMEs and providing job opportunities for Omanis. It is a step change in the country to have locally manufactured light rigs for PDO."

Simon Drew, President of KCA Deutag's Land Operation, said: "KCA Deutag has been operating in Sultanate of Oman and working for PDO for almost 60 years and we are delighted to have been awarded this opportunity to continue this long-standing relationship. This investment demonstrates our commitment to PDO and the Sultanate of Oman to deliver outstanding In-Country Value with the first four rigs constructed locally. It is also validation of our excellent safety record, incident-free operations and technological performance - as well as an opportunity to deliver energy-efficient rigs that benefit from our fuel optimisation technology and are capable of adopting grid and hybrid technologies in the future."

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