Abu Dhabi, UAESaturday 7 December 2019

Adnoc's logistics arm expects fleet capacity addition from set-up of new trading unit

The company expects to finalise a joint venture with China's Wanhua Chemical before year-end

Attacks on tankers transiting the Gulf over the summer had minimal impact on volumes being transported, said Adnoc Logistics & Services chief executive Captain Abdulkareem Al Masabi. Antonie Robertson/The National
Attacks on tankers transiting the Gulf over the summer had minimal impact on volumes being transported, said Adnoc Logistics & Services chief executive Captain Abdulkareem Al Masabi. Antonie Robertson/The National

Abu Dhabi National Oil Company’s logistics and services subsidiary expects a further expansion in fleet capacity on the back of higher volumes as the company establishes its new global trading unit.

Adnoc set up a trading venture for the sale of products from its refinery at Ruwais in the Western Region earlier this year.

The unit, which will be based in the Abu Dhabi Global Market, will begin physical and derivative trading of products in 2020. Italian energy company Eni and Austria’s OMV were awarded stakes of 20 and 15 per cent, respectively, in the unit.

“This is where our next expansion and growth is with AGT [Adnoc Global Trading], for example, and with Adnoc’s trading arm itself. This will even give us another boost when it comes to fleet exposure,” Captain Abdulkareem Al Masabi told The National.

“This will expand our destinations to carry volumes and products from around the globe into our system and outside as well,” he added.

Discussions are under way with AGT and Adnoc’s trading arm to arrive at “the volumes, the tonnage and the capacity” Adnoc Logistics and Services will need to support additional flows.

The company, which was formed after the merger of three Adnoc units in 2016, plans to acquire its first crude oil tankers, besides the expansion of its gas and dry bulk fleet, by adding more than 25 vessels over the next five years. The additional flow of refined products globally is expected to add more vessels to its fleet.

“Refined products have traditionally been traded between us and the East but today with the creation of AGT and trading as well, you can imagine the biggest volumes can come from anywhere,” said Capt Al Masabi.

The company has more exposure to Europe, the Mediterranean and the Americas from the opening up of new global offices, he said.

The company is also in the process of completing a shipping joint venture before the year end with China’s Wanhua Chemical, building on an earlier 10-year liquefied petroleum gas supply contract, that will include the operation of two Very Large Gas Carrier vessels.

“We’re in the market looking for assets and vessels that will serve this joint venture,” said Capt Al Masabi.

Terms and conditions on the structure of the joint venture are being finalised, with the possibility of expanding the portfolio to include products other than LPG, he added.

LPG, a refined product, is in high demand in Asia, mainly as a cooking fuel stored in cylinders for stoves as well as a propellant, refrigerant, vehicle fuel and as a feedstock for the petrochemicals industry.

Adnoc Logistics and Services does not currently plan to spend on infrastructure development to support its fleet, with its existing built assets sufficient to meet requirements over the next two years, the chief executive said.

He declined to comment on Adnoc’s spending plans for acquiring new fleet or capital expenditure for the forthcoming year.

Attacks on oil tankers transiting the Arabian Gulf over the summer had minimal impact on volumes being transported, said Capt Al Masabi.

Additional safety measures have since been implemented, he said.

Updated: November 23, 2019 08:04 PM

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