ADNOC L&S, the largest shipowner in the Middle East, has a total of 14 liquefied gas carriers with a total value of more than 20 billion yuan. Thanks to the active mediation of South Korean President Yoon Suk-yeol, South Korea's two major shipbuilders successfully won 10 LNG ship construction contracts at a "rare" low price. Jiangnan Shipbuilding, as an "old friend" of ADNOC L&S, won an order for 4 VLACs.
Less than $260 million per unit? South Korea's two largest shipbuilders have received 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 (about 18.178 billion yuan) with two South Korean shipyards, Hanwha Marine (formerly Daewoo Shipbuilding) and Samsung Heavy Industries, to order 8+2 LNG carriers of 174,000 cubic meters.
Among them, Hanwha Marine and Samsung Heavy Industries have each received orders for 4+1 new ships. According to the announcements issued by the two shipyards, the price of each ship is about $258-$259 million. The new vessels are scheduled to be delivered in early 2028 and will be subject to a 20-year time charter agreement with a subsidiary of the ADNOC Group. With the addition of this new batch of vessels, ADNOC L&S will also increase the number of LNG vessels in its fleet from 14 to at least 22 vessels.
The LNG carriers will be equipped with ME-GA and XDF2.2 engines, which have the highest fuel economy and lowest emissions in the company's global fleet, ADNOC said. State-of-the-art sustainability technologies are used, including a cargo conditioning system designed to reduce evaporation of LNG cargoes in transit, a system that directs boil-off gases into the engine to improve fuel efficiency and reduce fuel consumption, a real-time emissions monitoring system, and an advanced cargo sealing system that reduces methane emissions.
These features will make the new vessels one of the most fuel-efficient vessels in the world, reinforcing ADNOC L&S's leadership position in decarbonising maritime transport and achieving ADNOC Group's 2045 net-zero emissions target.
At the end of May this year, ADNOC signed a letter of intent with Hanwha Marine and Samsung Heavy Industries to build 6+4 large LNG carriers, and the cost of the first batch of six LNG carriers at that time was about $1.6 billion, equivalent to a single ship cost of about $267 million. In contrast, the number of ships under formal construction contracts increased from six to eight, but the price fell from $267 million to less than $260 million.
For reference, according to Clarkson's data, the current newbuilding price of a 174,000-square-meter LNG carrier is $264 million, which is basically the same as $261 million in the same period last year.
It is worth mentioning that since the fourth quarter of last year, among the large LNG ship orders undertaken by South Korean shipbuilders, except for Qatar's "100 ships plan" orders, the rest of the ship prices have exceeded 260 million US dollars. In May this year, HD Korea Shipbuilding & Marine received orders from African shipowners for two LNG carriers at a record price of US$270.5 million each.
Abdulkareem Al Masabi, CEO of ADNOC L&S, said: "The construction contracts with Samsung Heavy Industries and Hanwha Marine are an important step in our transformational growth strategy and demonstrate ADNOC L&S's strong commitment to value-added strategic investments. These LNG carriers will employ cutting-edge technologies to improve fuel efficiency and reduce carbon intensity to achieve the company's sustainability goals and will bring new opportunities for customers and geographic expansion while creating more value for our shareholders. ADNOC L&S is proud to partner with these two world-class shipyards to strengthen our industrial relationship with South Korea. ”
The largest shipowner in the Middle East has expanded significantly, and Jiangnan Shipbuilding has won 4 VLAC orders
The latest order is ADNOC L&S's first time to order a large LNG carrier from a Korean shipbuilder. It is understood that ADNOC L&S signed the first large LNG ship order in Jiangnan Shipbuilding in 2022, and successively ordered 6 175,000 cubic meter Mark III Flex LNG carriers, which is the first time that a Chinese shipyard has undertaken an order for MARK III thin film large LNG carriers, and it is also China's first order for the pure international market in the field of large LNG carriers.
Founded in 1971, ADNOC is the UAE's state-owned oil company and is the largest oil company in the UAE and the 12th largest in the world in terms of oil production. At the end of 2016, ADNOC integrated its three subsidiaries, ADNATCO, IRSHAD and ESNAAD, to create ADNOC L&S, which provides oil, gas and petroleum derivatives to customers worldwide and owns and operates the largest transport fleet in the UAE.
In 2019, ADNOC L&S launched its fleet expansion program with the goal of adding more than 25 vessels over the next 5 years, acquiring the first crude oil tankers and expanding the fleet of liquefied gas and dry bulk carriers, in line with ADNOC 2030's smart growth strategy. According to the official website, ADNOC L&S shipping has a fleet of more than 600 vessels, including liquefied gas carriers, oil tankers and bulk carriers, of which 57 are self-owned ships.
Earlier this year, ADNOC L&S launched a large-scale LNG carrier construction project with plans to order up to 10 LNG carriers and four ultra-large liquid ammonia carriers (VLAC), with Korean shipyards and Gangnam Shipbuilding both participating in the bidding. Among them, Jiangnan Shipbuilding won 4 VLAC orders of 93,000 cubic meters, with a total value of about 480 million US dollars (about 3.49 billion yuan).
Jiangnan Shipbuilding is one of ADNOC L&S's favorite shipyards. Jiangnan Shipbuilding has played an important role in the expansion of ADNOC L&S's fleet, and the cooperation between the two parties began in 2020. At that time, AW Shipping, a joint venture company of ADNOC L&S, placed an order for five 86,000 cubic meter dual-fuel VLGCs in Jiangnan Shipbuilding, and the new ships will be delivered in 2022 and 2023. In 2022, Jiangnan Shipbuilding received another order for six large LNG carriers from the company.
As a result, market watchers had previously predicted that the order for up to 10 LNG carriers would likely fall to Jiangnan Shipbuilding again, considering that Jiangnan Shipbuilding has already built a series of 175,000 cubic meter LNG carriers for ADNOC L&S. However, ADNOC L&S ultimately chose to hand over the order for 10 LNG carriers to South Korea.
It is understood that this batch of orders from ADNOC L&S is the result of South Korean President Yoon Suk-yeol's full lobbying. In May this year, Yoon Suk-yeol and UAE President Sheikh Mohammed bin Zayed Al Nahyan held a summit meeting at the Yongsan presidential office and signed the South Korea-UAE Comprehensive Economic Partnership Agreement (CEPA). Taking this summit meeting as an opportunity, ADNOC signed a letter of intent with two major Korean shipbuilders to build LNG carriers as a traditional clean energy solution.
In recent years, South Korean President Yoon Suk-yeol has actively promoted the development of Korean companies in the Middle East market and has achieved rich returns. During his previous trips to Saudi Arabia and Qatar, Yoon Suk-yeol met with leaders of various countries and signed a number of economic cooperation agreements, creating favorable conditions for South Korean companies to explore new business opportunities in the Middle East.