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Adnoc L&S unit awards $2bn contract to Chinese shipyard

By Pramod Kumar
Freighter, Ship, Transportation A view of a vessel docked at a port. The new vessels of AW Shipping will be among the world’s largest ethane and ammonia carriers Unsplash.com/Fredrick F
The new vessels from AW Shipping will be among the world’s largest ethane and ammonia carriers

AW Shipping, a joint venture between Adnoc Logistics & Services and China’s Wanhua Chemical Group, has awarded a $1.9 billion contract to Chinese shipyard Jiangnan to construct “green and low-carbon” ammonia and ethane carriers.

The contract for nine very large ethane carriers (VLECs) is priced at $1.4 billion, the Adnoc subsidiary, which trades on the Abu Dhabi bourse, said in a statement on Tuesday.

The deal for two very large ammonia carriers (VLACs) will cost $250 million, with the option for another two VLACs at the same price.

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The new vessels will be among the world’s largest ethane and ammonia carriers.

The VLECs will be deployed on 20-year time charter contracts, generating revenue of $4 billion.

Each VLEC will have a carrying capacity of 99,000 cubic metres and is scheduled for delivery between 2025 and 2027. The VLACs, with a carrying capacity of 93,000 cubic metres each for ammonia, are planned for delivery between 2026 and 2028.

“This new order by AW Shipping reinforces our ongoing fleet expansion and will bolster our ability to transport lower-carbon energy sources and support the energy transition,” said Abdulkareem Al Masabi, chairman of AW Shipping and CEO of Adnoc L&S.

Currently, more than 25 VLECs are in operation with different shipping companies worldwide.

Upon receiving the nine new vessels, AW Shipping will own one of the world’s largest fleets of VLECs.

Profits up at Adnoc L&S

This month Adnoc L&S awarded contracts worth AED9.2 billion to South Korean shipbuilders to construct liquified natural gas carriers.

Last year, Adnoc L&S announced plans to invest $4-$5 billion over the medium term. The company reported a 138 percent increase in net profit year on year in 2023, with a 41 percent annual revenue increase.

Following its robust first-quarter financial performance, the company revised its medium-term growth guidance upwards to exceed $5 billion in energy-related maritime logistics.

In June, Adnoc L&S announced a $1.4 billion acquisition of Navig8 TopCo Holdings, a shipping and tanker operator.

Since its IPO, the company has committed $3.9 billion to organic growth capex, mostly against long-term contracts.

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