Abu Dhabi National Oil Company's logistics and services subsidiary signed an agreement, its second in two years, with Singapore's Atlantic Gulf & Pacific company to lease one of its liquefied natural gas (LNG) vessels to be used as a floating storage unit.
The Ish will be used at the first LNG Import Terminal in the Philippines at Ilijan in Batangas Bay, Adnoc Logistics & Services said on Wednesday.
The move is expected to extend the vessel's life by 11 to 15 years, while also strengthening Adnoc L&S's FSU revenue streams.
LNG is natural gas that turns into a colourless and non-toxic liquid when cooled to about minus 162°C. The cooling process shrinks the volume of the gas, making it easy to ship and store. It can be used for cooking, heating homes, manufacturing products and fuelling commercial vehicles.
Global LNG demand grew by 20 million tonnes in 2021 with Asia accounting for virtually all of the growth, Wood Mackenzie says.
Demand for LNG globally is currently projected to grow by up to 5 per cent annually over the next 20 years, as it can contribute to better air quality and lower green house gas emissions in the power sector. This makes LNG ideal for the transition to a low-carbon energy future, supporting a mix of fuels to help countries balance energy demand with their clean energy goals.
"By providing AG&P with another flexible storage solution for their new LNG terminal, we are able to extend the operational life of this vessel, unlocking incremental value and new opportunities for growth," said Cpt Abdulkareem Al Masabi, chief executive of Adnoc L&S.
"Our project with AG&P in the Philippines will contribute to the economic growth of the country by leveraging the potential of clean LNG for power generation.”
Built in 1995 in Japan, the Ish has a capacity of 137,315 cubic metres and was one of the largest LNG vessels in the world at the time of its launch.
The deal comes as LNG prices reach a record high amid strong demand and limited supply as countries relax Covid-related curbs.
AG&P will lease the vessel from the third quarter of 2022 and has the rights for 11 years with an option to extend by another four.
The Ish is part of a fleet of eight LNG vessels operated by Adnoc L&S and is currently leased to Adnoc LNG, a subsidiary. It will be used by AG&P once the contract finishes, the company said.
Adnoc L&S leased its first LNG vessel to AG&P in 2020 to be used as a floating storage unit at the Karaikal LNG import terminal in India. The unit will be leased over a period of 15 years from 2021 onwards, with the option of extending it for five years.
Adnoc L&S was formed in 2016 after the merger of three Adnoc units and it plans to add 25 vessels to its fleet over the next five years.
Last year, it teamed up with AD Ports Group to develop a new port and associated facilities at the Ta'ziz chemical manufacturing centre in Ruwais. The two companies also plan to select an international operator to form a joint venture and develop the port.