AD Ports Group forms joint venture with Kazakhstan’s state energy company

The new company will provide offshore services in the energy-rich Caspian Sea

Capt Mohamed Al Shamisi, managing director and group chief executive of AD Ports Group, and Mirzagaliyev Magzum, chairman of KazMunayGas, witness the signing of the agreement. Photo: AD Ports Group

Abu Dhabi Ports Group, the operator of industrial cities and free zones in the emirate, has signed a shareholder agreement with Kazmortransflot (KMTF), a unit of Kazakhstan's state energy company KazMunayGas to set up a joint venture.

AD Ports Group will have a 51 per cent stake in the new entity while KMTF will own 49 per cent.

The new company is expected to offer a “broad” range of services, including offshore support and crude oil transport vessels in the Caspian and Black seas, AD Ports Group said in a filing to the Abu Dhabi Securities Exchange on Wednesday.

KMTF, the offshore logistics arm of KazMunayGas, will submit tender for a “number of identified projects” with estimated maritime contract values of more than $780 million, AD Ports Group said.

“This new joint venture with KMTF opens the door to enormous opportunities in the Caspian Sea, which plays a key role in global energy production, and is serviced by prominent players within the energy sector,” said Falah Al Ahbabi, chairman of AD Ports Group.

The Caspian Sea region, one of the oldest oil-producing areas in the world, plays an increasingly important role in the global energy industry.

The area has significant oil and natural gas reserves in the Caspian Sea and onshore in the Caspian basin.

The deal comes as Kazakhstan looks to expand production from its giant Kashagan oilfield, which is operated by a consortium that includes Italy’s Eni, US-based ExxonMobil and KazMunayGas.

“The endeavour can expect to create opportunities around the region, particularly with the ongoing upgrades of fleets and facilities … and some major offshore projects, such as the multibillion-dollar expansion of the Kashagan field,” AD Ports Group said.

AD Ports Group, which also signed a vessel-pooling agreement with KMTF, said the companies would aim to jointly transport eight million to 10 million tonnes of crude oil annually in the medium-term.

Established in 2006, AD Ports Group owns and operates 10 ports in the UAE. These include Khalifa Port, Zayed Port, Mussaffah Port, Fujairah Terminals, Community Ports, Kamsar Port and the Abu Dhabi Cruise Terminal, as well as a terminal in Guinea.

AD Ports Group also manages more than 550 square kilometres of industrial zones and an end-to-end logistics business, besides offering a range of maritime services.

Russia’s military offensive in Ukraine and the chronic underinvestment in new oil and gas infrastructure have led to a global energy crisis.

“As the world looks for reliable energy sources in challenging conditions, we will be able to provide a full portfolio of services supported by a modern fleet and teams of experts combining local knowledge and global experience,” KazMunayGas chairman Mirzagaliyev Magzum said.

Oil and gas upstream investment needs to increase and be sustained at near pre-coronavirus levels of $525 billion through 2030 to ensure market balance, according to the International Energy Forum.

Upstream investment in 2021 was depressed for a second consecutive year at $341 billion — about 25 per cent below 2019 levels.