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Adnoc + Wanhua JV place USD 1.9 bn carrier order: AW Shipping, a joint venture between the UAE’s Adnoc Logistics and Services and China’s Wanhua Chemical Group, has placed an order worth USD 1.9 bn for 11 dual-fuel low carbon carriers from China’s Jiangnan Shipyard, with deliveries starting next year, according to a statement (pdf). The move aims to enhance Adnoc’s capacity to transport lower-carbon energy sources.
Order breakdown: AW Shipping ordered nine Very Large Ethane Carriers (VLECs) valued at USD 1.4 bn, and two Very Large Ammonia Carriers (VLACs) valued at USD 250 mn, with an option for two additional VLACs at the same price, according to the statement.
Details: The VLEC carriers — which rank among the largest ethane and ammonia carriers globally — will be operated under a 20-year time charter contract, and are expected to generate USD 4 bn in revenues. The VLACs, set for delivery between 2026 and 2028, will have a carrying capacity of 93k cubic meters and will be powered by liquefied petroleum gas (LPG) or conventional fuels. The VLECs, scheduled for delivery between 2025 and 2027, will each have a carrying capacity of 99k cubic meters and can be powered by ethane or conventional fuels.
Adnoc is going all in on ammonia: Adnoc-ADQ JV Ta’ziz, Fertiglobe, GS Energy, and Mitsui all recently signed a shareholder agreement in January 2023 to construct a facility to produce some 1 mn tons of low-carbon ammonia annually in the UAE. Adnoc also delivered the world’s first certified bulk commercial shipment of low-carbon ammonia produced using carbon capture and storage to Japan’s Mitsui back in May from Fertiglobe’s Ruwais facility near Abu Dhabi. The company also acquired a majority 51% +1 stake in Fertiglobe from OCI to expand its global ammonia production network and signed an MoU with OCI to explore importing and distributing ammonia in the EU at the time.
But will the ammonia industry meet its goals? It is unclear whether ammonia production will meet forecasts by 2027, meaning that the increased supply of ammonia fuel carriers may be in excess. Almost 66% of announced ammonia projects are still in early development, while some have not begun feasibility studies. However, given that the new vessels are adaptable and can carry both ammonia and petroleum cargo, firms may be forced to use the vehicles to carry hydrocarbons and petrochemicals if clean ammonia production falls short of production forecasts.
About AW Shipping: AW Shipping, formed in 2020, looks to develop the industrial relationship between China and the UAE. The JV was supported in 2018 by a 10-year LPG supply contract inked by the pair, according to a statement. Under the JV, Adnoc group and global suppliers offer its LPG cargo and other petroleum products, which are transported to Wanhua Group’s global manufacturing bases.
