ADNOC L&S secures $975m contract to build offshore artificial island

ADNOC L&S has secured a $975m artificial island construction contract from ADNOC Offshore, a significant milestone for the maritime logistics firm’s strategy to pursue new growth opportunities.

The engineering, procurement and construction (EPC) contract covers dredging, land reclamation and marine construction of an artificial island for the Lower Zakum offshore field.

The EPC market is expected to experience substantial growth in the region in the coming years. The company aims to offer a broader range of services to its customers while facilitating the growth of ADNOC Group’s upstream and downstream operations.

The contract is part of Lower Zakum’s long-term development plan that seeks to unlock greater value while helping to meet the increasing global energy demand safely and sustainably. ADNOC Offshore has extensive experience in deploying the artificial island concept for project delivery, resulting in significant cost savings and environmental benefits compared to conventional approaches that require more offshore installations and infrastructure.

#ADNOC L&S awarded $975 million EPC Contract for Construction of Offshore Artificial Island#WamNewshttps://t.co/LjRl7Wp6gk pic.twitter.com/nMHRyzLZvs

— WAM English (@WAMNEWS_ENG) June 8, 2023

With a diverse fleet of 245 vessels and approximately 540 vessels operated and chartered annually, combined with its 1.5 million square meter logistics base in Abu Dhabi and integrated logistics capabilities, ADNOC L&S is the region’s largest shipping and integrated logistics company.

The company is targeting an average annual EBITDA growth in the low teens over the medium term. This growth will be driven by new contract awards, further expansion of its integrated logistics services platform and optimised redeployment of jack-up barges.

ADNOC L&S public offering

Meanwhile, the EPC contract is ADNOC L&S’ first major win since following the company’s listing on the Abu Dhabi Securities Exchange earlier this month.

The maritime logistics firm soared as much as 52 per cent on its trading debut after its hugely oversubscribed $769m IPO on the Abu Dhabi bourse. ADNOC Group sold 1.41 billion shares — or a 19 per cent stake — in ADNOC L&S at Dhs2.01 per share, the top of a narrow range that started at Dhs1.99.

The offering drew overwhelming investor demand, with $125bn in overall orders, surpassing the level seen in Aramco’s record $29.4bn IPO which got over $119bn in demand.

The company, which has been expanding its fleet to cope with increased demand from the state-owned firm’s businesses, plans to pay an annualised 2023 cash dividend of $260m and expects to increase this by at least 5 per cent annually. It is targeting capital expenditure of $4bn to $5bn in the medium term.

Read: ADNOC L&S soars over 50% above listing price on ADX