14 vessels, over 20 billion in mega-orders finalized! The Middle East's largest shipowner is coming in strong.
2024-07-24 09:00
ADNOC L&S, the largest shipowner in the Middle East, has finalized its plan to build 14 liquefied gas carriers totaling over 20 billion yuan. Thanks to the active mediation of South Korean President Yoon Suk Yeol, two major South Korean shipyards successfully secured contracts for 10 LNG carriers at a "rare" low price. Jiangnan Shipyard, as an "old friend" of ADNOC L&S, won orders for 4 VLACs.
Unit price less than 260 million USD? Two major South Korean shipyards win orders for up to 10 LNG carriers
On July 1, ADNOC Logistics & Services (ADNOC L&S), a subsidiary of Abu Dhabi National Oil Company (ADNOC), announced that it had signed a construction contract worth US$2.5 billion (approximately RMB 18.178 billion) with two South Korean shipyards – Hanwha Ocean (formerly Daewoo Shipbuilding) and Samsung Heavy Industries – for 8+2 174,000 cbm LNG carriers.
Among them, Hanwha Ocean and Samsung Heavy Industries each undertook orders for 4+1 new vessels. According to announcements released by the two shipyards, the price per vessel is approximately US$258-259 million. These new vessels are scheduled for phased delivery starting in early 2028 and will be chartered for 20 years under time charter contracts with ADNOC Group subsidiaries. With the addition of these new vessels, ADNOC L&S's LNG carrier fleet will increase from 14 to at least 22 vessels.
ADNOC stated that these LNG carriers will be equipped with ME-GA and XDF2.2 engines, offering the highest fuel economy and lowest emissions within the company's global fleet. They adopt the most advanced sustainable technologies, including cargo conditioning systems designed to reduce LNG cargo boil-off during transit, systems that feed boil-off gas into engines to improve fuel efficiency and reduce fuel consumption, real-time emission monitoring systems, and advanced cargo containment systems to minimize methane emissions.
These features will make these new vessels among the most fuel-efficient ships in the world, thereby solidifying ADNOC L&S's leading position in maritime decarbonization and achieving the ADNOC Group's net-zero emission target by 2045.
ADNOC signed a Letter of Intent for the construction of 6+4 large LNG carriers with Hanwha Ocean and Samsung Heavy Industries at the end of May this year. At that time, the first 6 LNG carriers were priced at approximately US$1.6 billion, equivalent to about US$267 million per vessel. In contrast, the number of vessels in the formal construction contract increased from 6 to 8, but the ship price decreased from US$267 million to below US$260 million.
For reference, according to Clarkson's data, the current newbuild price for a 174,000 cbm LNG carrier is US$264 million, largely consistent with US$261 million in the same period last year.
It is worth mentioning that since the fourth quarter of last year, all large LNG carrier orders undertaken by South Korean shipyards, except for Qatar's "100-ship plan" orders, have exceeded US$260 million. In May this year, HD Korea Shipbuilding & Offshore Engineering secured orders for 2 LNG carriers from an African shipowner at an even higher price of US$270.5 million per vessel, setting a new historical record.
Abdulkareem Al Masabi, CEO of ADNOC L&S, stated: "The construction contracts signed with Samsung Heavy Industries and Hanwha Ocean are an important step in our transformative growth strategy and demonstrate ADNOC L&S's firm commitment to value-added strategic investments. These LNG carriers will incorporate cutting-edge technology to enhance fuel efficiency and reduce carbon intensity, achieving the company's sustainability goals, and will bring new opportunities for customer and geographic expansion while creating more value for our shareholders. ADNOC L&S is proud to partner with these two world-class shipyards and strengthen our industrial relations with South Korea."
Middle East's largest shipowner expands aggressively, Jiangnan Shipyard secures 4 VLAC orders
These latest orders mark ADNOC L&S's first large LNG carrier orders with South Korean shipyards. It is understood that ADNOC L&S placed its first large LNG carrier order with Jiangnan Shipyard in 2022, successively ordering 6 175,000 cbm Mark III Flex LNG carriers. This was the first time a Chinese shipyard undertook a MARK III membrane-type large LNG carrier order, and also China's first large LNG carrier order for the pure international market.
ADNOC is a state-owned oil enterprise in the UAE, established in 1971. In terms of oil production, it is the largest oil company in the UAE and the 12th largest globally, with a product chain covering almost all areas and varieties of oil, natural gas, and petrochemicals. At the end of 2016, ADNOC integrated three subsidiaries, ADNATCO, IRSHAD, and ESNAAD, to create ADNOC L&S, which provides oil, natural gas, and petroleum derivative products to global customers and owns and operates the largest transportation fleet in the UAE.
In 2019, ADNOC L&S launched a fleet expansion plan, aiming to add over 25 vessels within the next 5 years, acquire the first crude oil tankers, and expand its liquefied gas carrier and dry bulk carrier fleets, thereby aligning with ADNOC's 2030 Smart Growth Strategy. Official website data shows that ADNOC L&S's shipping business currently operates a fleet of over 600 vessels, including liquefied gas carriers, oil tankers, and bulk carriers, of which 57 are owned.
Earlier this year, ADNOC L&S initiated a large-scale liquefied gas carrier construction project, planning to order up to 10 LNG carriers and 4 Very Large Ammonia Carriers (VLACs). Both South Korean shipyards and Jiangnan Shipyard participated in the bidding. Among them, Jiangnan Shipyard won the order for 4 93,000 cbm VLACs, with a total value of approximately US$480 million (approximately RMB 3.490 billion).
Jiangnan Shipyard is one of ADNOC L&S's most favored shipyards. In ADNOC L&S's fleet expansion, Jiangnan Shipyard plays an important role, with cooperation between the two beginning in 2020. At that time, ADNOC L&S's joint venture AW Shipping placed an order with Jiangnan Shipyard for 5 86,000 cbm dual-fuel VLGCs, which were successively delivered in 2022 and 2023. In 2022, Jiangnan Shipyard again secured an order from the company for 6 large LNG carriers.
Therefore, market observers had previously predicted that, considering Jiangnan Shipyard had already built a series of 175,000 cbm LNG carriers for ADNOC L&S, the order for up to 10 LNG carriers would very likely fall to Jiangnan Shipyard again. However, ADNOC L&S ultimately chose to award the 10 LNG carrier orders to South Korea.
It is understood that ADNOC L&S's orders are the result of intense lobbying by South Korean President Yoon Suk Yeol. In May this year, Yoon Suk Yeol held a summit meeting with UAE President Sheikh Mohamed bin Zayed Al Nahyan at the Yongsan Presidential Office and signed the "Korea-UAE Comprehensive Economic Partnership Agreement (CEPA)". On the occasion of this summit, ADNOC signed Letters of Intent for LNG carrier construction with two major South Korean shipyards, as a traditional clean energy solution.
In recent years, South Korean President Yoon Suk-yeol has actively promoted the development of South Korean businesses in the Middle East market, yielding substantial returns. During his previous visits to Saudi Arabia and Qatar, President Yoon met with leaders of various countries and signed numerous economic cooperation agreements, creating favorable conditions for South Korean businesses to explore new opportunities in the Middle East.
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