A $14 billion order for 13 vessels! The leading chemical company joins hands with a Middle Eastern tycoon.

Wanhua Chemical, China's leading chemical company, is further deepening its cooperation with Middle Eastern countries. Simultaneously launching a 1.6 million-ton chemical project in collaboration with the Abu Dhabi National Oil Company (ADNOC), Wanhua Chemical has again partnered with ADNOC L&S, the largest ship owner in the Middle East, to sign a large order for 13 liquefied gas carriers at Jiangnan Shipyard, valued at 14 billion yuan.

Jiangnan Shipyard and AW Shipping sign contract for 4 VLACs + 9 VLECs

On the morning of July 23, Jiangnan Shipyard, a subsidiary of China Shipbuilding Group, and CSSC Trading jointly held a signing ceremony for the transfer of construction contracts with AW Shipping for two plus two 93,000 cubic meter ultra-large liquid ammonia carriers (VLACs) and nine 99,000 cubic meter ultra-large ethane carriers (VLECs).

H. E. Dr. Sultan Ahmed Al Jaber, UAE Cabinet Member, Minister of Industry and Advanced Technology and ADNOC CEO; Wu Xiande, Deputy Secretary of the Fuzhou Municipal Party Committee and Mayor; Liao Zengtai, Chairman of Wanhua Chemical; Lin Ou, Chairman of Jiangnan Shipyard; and Hu Kai, General Manager of CSSC Trading, attended and witnessed the signing ceremony. Capt. Abdulkareem Al Masabi, CEO of ADNOC L&S and Chairman of AW Shipping; Kou Guangwu, President of Wanhua Chemical; Lin Qingshan, Deputy General Manager of Jiangnan Shipyard; and Wu Aijun, Deputy General Manager of CSSC Trading, signed the documents on behalf of their respective parties.

AW Shipping is a joint venture established in 2020 by ADNOC Logistics & Services (ADNOC L&S), a subsidiary of the Abu Dhabi National Oil Company (ADNOC), and Wanhua Chemical. Its aim is to develop ADNOC L&S's global business, meet the growing demand for new energy in China's decarbonization industry, and strengthen industrial relations between the UAE and China.

According to an announcement released by ADNOC L&S on the same day, the total value of these 13 new vessels is up to US$1.9 billion (approximately RMB 13.822 billion). The 9 VLECs are valued at approximately US$1.4 billion, equivalent to US$156 million per vessel. These new vessels can use ethane or traditional fuels and are scheduled for delivery between 2025 and 2027. The 4 VLACs are valued at approximately US$500 million, equivalent to US$125 million per vessel, and can be powered by LPG or traditional fuels. Delivery is scheduled between 2026 and 2028.

ADNOC L&S points out that currently there are more than 25 VLECs in operation globally. With the delivery of the latest 9 vessels from Jiangnan Shipyard, AW Shipping will own the world's largest VLEC fleet.

Capt. Abdulkareem Al Masabi, CEO of ADNOC L&S and Chairman of AW Shipping, said: “This new order for AW Shipping supports ADNOC L&S's ongoing fleet expansion and will enhance our ability to transport low-carbon energy and support the energy transition. Importantly, these vessels will generate significant revenue for ADNOC L&S, demonstrating our commitment to delivering value-added strategic investments for our clients.”

Kou Guangwu, President of Wanhua Chemical, said: “We are very pleased to sign new VLEC and VLAC orders with our strategic partner ADNOC L&S through AW Shipping and Jiangnan Shipyard in China. This is a strong endorsement of China's high-end equipment manufacturing capabilities and lays a solid foundation for further deepening the strategic cooperation between Wanhua and ADNOC L&S. These green and low-carbon vessels will support Wanhua in reducing transportation carbon emissions, accelerating decarbonization goals, and are a concrete commitment from Wanhua to better address the challenges of climate change.”

Lin Ou, Chairman of Jiangnan Shipyard, said: “As a global leader in the design and construction of a full range of liquefied gas carriers, Jiangnan is very pleased to further strengthen its good cooperative relationship with ADNOC L&S and Wanhua Chemical. These newly ordered VLACs and VLECs are future-oriented green vessels independently designed by Jiangnan. We are committed to delivering these vessels on time and with high quality to better help ADNOC L&S achieve its transformation growth strategy and decarbonization goals.”

Jiangnan Shipyard introduced that the 93,000 cubic meter VLAC is a derivative vessel type (Panda 93A) of the company's independently developed and designed fourth-generation VLGC boutique vessel type. This vessel type is currently the world's largest liquid ammonia carrier, not only the preferred vessel type for long-distance green ammonia transportation, but also capable of fully loading liquefied petroleum gases such as propane and butane. The vessel has an overall length of 230.0 meters, a molded breadth of 36.6 meters, and a molded depth of 22.5 meters. It adopts a new generation of low-resistance hull form independently developed, allowing it to have excellent and balanced performance under full load, ballast, and different densities of liquid cargo loading conditions. The engine room is equipped with a mature LPG dual-fuel main engine and shaft-driven generator to meet current carbon emission requirements. Simultaneously, close cooperation is being carried out with main engine manufacturers and fuel supply system manufacturers on the processing of nitrous oxide for ammonia fuel main engines under development, laying the foundation for the application of ammonia-powered main engines in the future.

The 99,000 cubic meter VLEC is the world's largest VLEC (PANDA 99E) in terms of cargo capacity, independently researched and designed by Jiangnan Shipyard. In particular, its core cryogenic cargo containment system is the independently innovated Type B tank (BrillianceE®). The vessel has an overall length of 230 meters, a molded breadth of 36.6 meters, and a molded depth of 22.5 meters. It is suitable for transporting various liquefied gases such as ethane, ethylene, and LPG. Its advantages include low oil (gas) consumption, low boil-off rate (BOR), no liquid level loading restrictions, and low maintenance costs, making it the optimal vessel type "tailor-made" for long-distance ethane transportation, with significant economic and social benefits. This vessel type has won the highest award in the shipbuilding industry—the Science and Technology Special Prize. This vessel type features "leading design, advanced technology, green environmental protection, high efficiency and energy saving, comfortable environment, and intelligent management."

Jiangnan Shipyard/CSSC Trading, ADNOC L&S, and Wanhua Chemical have successful cooperation cases in projects such as ultra-large liquefied petroleum gas carriers (VLGCs) and large LNG carriers. Against the backdrop of strategic cooperation between China and the UAE, all parties, upholding their new visions for green development, have successfully joined hands again, injecting new impetus into the future low-carbon cause.

Joining hands with a Middle Eastern powerhouse, Wanhua Chemical will launch a 1.6 million-ton project.

Simultaneously with signing the shipbuilding agreement with Jiangnan Shipyard, AW Shipping also signed a 20-year time charter agreement for 9 VLECs with Wanhua Chemical's joint venture subsidiary, Wanrong New Materials (Fujian) Co., Ltd. The total value of these 9 VLEC time charter contracts will reach US$4 billion (approximately RMB 29.102 billion). These VLECs will meet Wanhua Chemical's transportation needs for ethane and ethylene procurement, including the upcoming Fujian joint venture project of Wanrong New Materials.

It is understood that Wanrong New Materials was established in 2021 as a joint venture between Wanhua Chemical and Yantai Zhongtao Investment Co., Ltd. in Fujian, focusing on petrochemical and polyolefin businesses. Wanhua Chemical holds 80% of Wanrong New Materials, while Yantai Zhongtao Investment Co., Ltd. holds 20%. As of mid-year, Wanrong New Materials had total assets of RMB 2.38 billion and net assets of RMB 1.393 billion.

It is worth mentioning that on July 23, Wanhua Chemical announced that Wanrong New Materials, ADNOC, Borealis, and Borouge jointly signed a "Project Cooperation Agreement" in Beijing. According to the agreement, ADNOC, Borealis, and Borouge will form an investment consortium to establish a Sino-foreign joint venture with Wanrong New Materials. The main purpose is to utilize Borealis's advanced proprietary Borstar® technology to jointly launch a feasibility study for the construction of a 1.6 million tons/year special polyolefin integrated facility in Fuzhou City, Fujian Province.

The announcement states that ADNOC is a leading diversified energy and petrochemical group wholly owned by the Emirate of Abu Dhabi. ADNOC's goal is to maximize the value of the emirate's vast hydrocarbon reserves through responsible and sustainable exploration and production to support the economic growth and diversification of the United Arab Emirates (UAE).

Borealis is headquartered in Vienna, Austria. OMV, the Austrian oil and gas group, owns 75% of its shares, while ADNOC owns the remaining 25%. Borealis is one of the world's leading providers of advanced and sustainable polyolefin solutions. In Europe, Borealis is also an innovation leader in polyolefin recycling and a major producer of basic chemicals.

Borouge is listed on the Abu Dhabi Securities Exchange. ADNOC holds 54% of Borouge's equity, and Borealis holds 36%. Borouge is a leading petrochemical company that provides innovative and differentiated polyolefin solutions for infrastructure, energy, transportation, healthcare, agriculture, and advanced packaging industries.

Wanhua Chemical stated that Borealis's advanced proprietary Borstar® technology, ethane-based cracking process, and mutually synergistic industrial chain utilization will be the core of the project. The investment consortium includes Borouge's extensive experience in the production of special polyolefins (including various raw material routes including ethane), combined with Wanhua's advantages in the ethane supply chain (including ethane raw material costs, dock resources, VLEC, production processes, etc.), which together form an excellent economic foundation for the ethane-based joint venture project.

Wanhua Chemical has previously established a complete polyurethane industrial chain in Fuzhou. It plans to fully utilize the hydrogen gas produced as a byproduct of the joint venture project's ethane cracking and the carbon dioxide captured from the polyurethane industrial chain, as well as using 100% zero-carbon electricity in the joint venture project to comprehensively reduce carbon dioxide emissions. After the special polyolefin project is launched, Wanhua Chemical will fully leverage the advantages of each shareholder to jointly research and develop high-end differentiated grades with high import dependence and high production difficulty.

It is understood that high-end polyolefins are mainly used in aerospace, automotive manufacturing, military equipment, and plastics industries. The technical barriers related to high-end polyolefin materials are relatively high. Some core key technologies, such as polymerization technology, catalyst technology, and processing modification technology, have been monopolized by foreign companies for a long time, resulting in relatively slow development of China's high-end polyolefins and a large reliance on imports.

Data shows that in 2022, China's high-end polyolefin production was approximately 4.8794 million tons, a year-on-year increase of 26.56%, while demand was approximately 12.496 million tons, a year-on-year increase of 16.24%.

Wanhua Chemical was founded in 1998 and listed on the Shanghai Stock Exchange in 2001. Its latest market capitalization is over 250 billion yuan, making it the A-share chemical stock with the highest market capitalization. As a global chemical new materials company, Wanhua Chemical mainly engages in the research, development, production, and sales of a full range of polyurethane products such as isocyanates and polyols, petrochemical products such as acrylic acid and esters, functional materials such as water-based coatings, and specialty chemicals. It is the first company in China to own independent intellectual property rights for methylene diphenyl diisocyanate (MDI) manufacturing technology, the largest polyurethane supplier in the Asia-Pacific region, and one of the most competitive MDI manufacturers globally.

Since 2019, Wanhua Chemical has begun cooperating with Abu Dhabi. In July of that year, ADNOC and Wanhua Chemical signed a cooperation framework agreement and a joint venture agreement with a potential value of up to US\$12 billion. In the third quarter of last year, the Abu Dhabi Investment Authority became the eighth-largest shareholder of Wanhua Chemical. In the following two quarters, the Abu Dhabi Investment Authority continued to increase its holdings in Wanhua Chemical. Its latest holdings are 22,089,400 shares, still ranking as the eighth-largest shareholder, with a shareholding ratio of 0.7%. Based on the latest stock price, the market value of its holdings is 1.759 billion yuan.

Public information shows that the Abu Dhabi Investment Authority was established in 1976. It mainly engages in stock, bond, and real estate investments. It is a global investment institution whose mission is to prudently invest the UAE's state-owned assets, create long-term value, and maintain and preserve the current and future prosperity of the Emirate of Abu Dhabi. In 2022, the Abu Dhabi Investment Authority was ranked among the top 10 sovereign wealth funds globally, ranking third with US\$790 billion.