ADNOC Buys More Newbuild Carriers To Bolster LNG Exports

The new, larger vessels are all part of the UAE’s ambitious LNG expansion plans, which also include a new plant in Fujairah.

The ADNOC L&S newbuilds will be built by Jiangnan Shipyard in China and have delivery dates ranging from 2025 to 2026.

ADNOC Logistics & Services, the shipping and maritime logistics arm of the Abu Dhabi National Oil Company (ADNOC), has purchased three additional newbuild liquefied natural gas (LNG) vessels for an undisclosed sum. ADNOC L&S is the region’s largest shipping and integrated logistics company, and the new vessels will bolster the company’s capacity as it responds to the growing global demand for LNG.

The newbuild LNG vessels, each with a capacity of 175,000 m3, are significantly larger than the current ADNOC fleet which have a capacity of 137,000 m3 each. ADNOC announced in April 2022 that it would acquire two newbuild LNG vessels. The latest order brings the total number of newbuild LNG vessels under construction for the company to five. Vessel deliveries are scheduled for 2025 and 2026.

“ADNOC L&S’ strategic acquisition of five state-of-the-art LNG vessels will support ADNOC’s existing LNG business as well as its significant growth plans,” said Captain Abdulkareem Al Masabi, chief executive of ADNOC L&S. “Several dynamics are strengthening the LNG market which makes the timing of these acquisitions particularly significant. This includes a renewed emphasis on energy access and security, as well as new environmental regulations that favor more fuel-efficient vessels, such as the newbuilds that we are purchasing.”

The newbuilds will be built at the Jiangnan Shipyard in China. Jiangnan Shipyard was also previously commissioned by ADNOC L&S in 2020 to build five very large gas carriers for AW Shipping, ADNOC L&S’ joint venture with China’s Wanhua Chemical Group.

The new vessels’ engine technology will reduce carbon dioxide and other emissions and, in combination with an air lubrication system, further reduce fuel consumption by at least 10%.

Over the past 24 months, ADNOC L&S has acquired 16 deepsea vessels, including eight very large crude carriers in 2021, that added 16 million bbl of shipping capacity. The company also acquired six product tankers, which expanded its product tanker fleet capacity to more than 1 million metric tonnes.

The UAE holds the seventh-largest proved reserves of natural gas in the world at 215 Tcf. Most of the reserves are held in large, sour-gas fields. Last December, ADNOC said it would double its LNG production from 6 mtpa to 12 mtpa. The goal was included in the company’s $127-billion spending plan for 2022–2026.

In May, the country announced it would move forward with plans to construct a second LNG export facility. The proposed two-train, 9.5-mtpa project is planned for the port of Fujairah on the Gulf of Oman. ADNOC has tapped McDermott International as design contractor and intends to award a contract for the construction of the plant in 2023.

Historically, most of the UAE’s LNG exports have gone to Japan; however in 2019, ADNOC added new clients like Vitol and TotalEnergies and new destinations for its exports including South Asia and China.

The UAE was the world’s 12th-largest LNG producer last year, making it a relatively small player on the global landscape. However, this new push and investment to bring more LNG to market could see its stature rise over the coming decades.

More regional export projects in the Middle East and Europe have gained momentum following Russia’s invasion of Ukraine. As sanctions and other restrictions are placed on Russian hydrocarbons, those historically dependent on that supply look to find new, stable alternatives.