Adnoc L&S awarded $975m contract to develop island in Lower Zakum oilfield

At least 75 per cent of the total deal value will flow back into the UAE economy

The contract is the first major deal bagged by Adnoc L&S after it listed on the ADX last week. Photo: Adnoc L&S
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Adnoc Logistics and Services has been awarded a $975 million contract by Adnoc Offshore to build an artificial island in the Lower Zakum offshore field.

At least 75 per cent of the total contract value for dredging, land reclamation and marine construction of the island will flow back into the UAE economy, Adnoc L&S said in a filing to the Abu Dhabi Securities Exchange on Thursday.

“Capitalising on our project management expertise, end-to-end logistics solutions and strategic partnerships, Adnoc L&S is primed to execute major offshore EPC [engineering, procurement and construction] contracts,” said its chief executive Capt Abdulkareem Al Masabi.

“This contract award … exemplifies our strategy to tap into new growth areas, showcasing the expanding range of services we offer to our customers.”

This is the maritime logistics company’s first major contract after being listed on the ADX last week.

The company, whose shares surged as much as 58 per cent on its debut on June 1, set its final offer price at Dh2.01 a share, the higher end of a previously announced range that began at Dh1.99 a share.

This gave Adnoc L&S a market capitalisation at the time of listing of about $4.05 billion.

This was the second Adnoc unit to go public this year and the sixth to date. Adnoc L&S was the second-biggest listing in the Middle East this year after the IPO of Adnoc Gas in March.

Adnoc L&S is undertaking a global expansion programme aimed at offering a broader service to its customers while supporting and enabling the growth of Adnoc’s upstream and downstream operations.

“The EPC market is expected to experience substantial growth in the region in the coming years,” the company said.

In March, Adnoc L&S unveiled its global Integrated Logistics Services Platform and signed a $2.6 billion contract with Adnoc Offshore to provide logistics services.

The platform is among the largest turnkey offshore logistics offerings in the world that will enable Adnoc L&S to co-ordinate end-to-end management of logistics and maritime operations from its Mussaffah base in Abu Dhabi.

The company has the most diversified fleet in the Middle East, owning 245 vessels and managing more than 600 ships annually.

Its fleet and its 1.5 million-square-metre integrated logistics base position it as a global maritime leader.

Adnoc L&S expects growth of average annual earnings before interest, taxes, depreciation and amortisation to be in the “low teens” over the medium term.

This growth will be driven by new contract awards, further expansion of the Integrated Logistics Services Platform and optimised re-use of jack-up barges, the company said.

Adnoc L&S reported a net profit of $144.9 million in the first quarter of 2023, up 79 per cent from the same period a year earlier.

Revenue for the period grew to $592.18 million, from $312.96 million a year ago.

The company could look at expanding its operations in the broader GCC region, chief financial officer Nicholas Gleeson told The National an interview last week.

“We already have offices now in Qatar and Saudi Arabia as a result of the acquisition of Zakher Marine, so extending our reach using those offices and growing into those regions is definitely attractive,” he said.

In July last year, Adnoc L&S bought Zakher Marine International, an Abu Dhabi company that owns and operates offshore support vessels.

Updated: June 08, 2023, 3:41 PM