ADNOC L&S splashes out with US$1.9Bn gas carrier newbuild order

A joint venture of ADX-listed ADNOC Logistics and Services plc (ADNOC L&S) has inked a US$1.9Bn shipbuilding deal with China’s Jiangnan Shipyard to construct nine very large ethane carriers (VLECs) and two very large ammonia carriers (VLACs). The contract for the VLACs, valued at US$250M, contains options for two additional VLACs.

The gas carriers will be for AW Shipping, a joint venture between ADNOC L&S and Wanhua Chemical Group. The nine 99,000-m³ VLECs will have ethane dual-fuel propulsion, with deliveries stretching from 2025 to 2027. Carrying ammonia, the 93,000-m³ VLACs will be LPG dual-fuel propulsion, with deliveries between 2026 and 2028. 

These 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 US$4Bn, according to Abu Dhabi-based ADNOC L&S.

AW Shipping chairman and ADNOC L&S chief executive, Abdulkareem Al Masabi, said the order would “bolster our ability to transport lower-carbon energy sources and support the energy transition. Importantly, the vessels will generate substantial revenue streams for ADNOC L&S, underscoring our commitment to value-accretive strategic investments as we serve our customers.”

Currently, there are more than 25 VLECs in operation with different shipping companies around the world. Upon receiving the nine new vessels, AW Shipping will own one of the world’s largest fleets of VLECs.

Wanhua Chemical president and chief executive, Kou Guangwu said, “These green and low-carbon ships will support Wanhua to reduce transportation carbon emissions, accelerate decarbonisation objectives and is a concrete commitment from Wanhua to better deal with climate change challenges.”

The AW Shipping joint venture was established in 2020 to grow ADNOC L&S’ global operations and strengthen the industrial relationship between the UAE and China. This latest order aligns with ADNOC L&S’ vision to deploy more than US$5.0Bn in value accretive investments following the company’s ADX listing in June 2023.

Chairman of gas carrier-building specialist Jiangnan Shipyard, Lin Ou said, “These newly ordered VLECs and VLACs are future-oriented green vessels developed by Jiangnan."

Follows LNG newbuild mega-deal

This shipbuilding deal follows on the heels of a US$2.5Bn agreement with Samsung Heavy Industries and Hanwha Ocean for eight firm 174,000-m³ LNG carriers. Each South Korean shipbuilder was awarded a firm contract for four LNG newbuilds, with an owner option for one more. Propulsion for the LNG carriers, which will begin delivering in 2028, will be either MAN Energy Solutions’ slow-speed, dual-fuel MAN ME-GA or WinGD XDF2.2 engines. These LNG carriers will go on 20-year long-term time charters with the Abu Dhabi company’s subsidiaries. The eight firm newbuilds will increase the ADNOC L&S fleet to 22 LNG carriers.