Adnoc Pays $1.3 Billion For Ships As Hormuz Risk Tightens Gulf Exports
AGBI reported that Adnoc bought 11 crude and gas carriers for $1.3 billion as Gulf producers use owned shipping and shuttle systems to keep exports moving through the Hormuz crisis.
Adnoc's $1.3 billion purchase of 11 crude and gas carriers has turned shipping capacity into a direct energy-security tool as Gulf producers try to keep exports moving through the Hormuz crisis, AGBI reported.
The Abu Dhabi state oil company's deal includes six very large crude carriers and five very large gas carriers.
Nine vessels came from the secondary market, allowing Adnoc Logistics & Services to add tonnage faster than it could through new ship orders; delivery of those second-hand vessels is due in the third quarter.
Adnoc Buys Control Over Export Risk
Neil Quilliam, a Chatham House Middle East specialist and AGBI columnist, put the constraint in operational terms: producers now need control over transport as well as barrels because fewer owners are prepared to send ships through the strait.
The purchase gives Adnoc more command over export timing and reduces dependence on third-party operators.
The premium for immediate shipping capacity is visible in recent vessel prices.
Richard Meade, editor-in-chief of Lloyd's List, linked Adnoc's premium VLCC purchases to a pendulum operation through Hormuz, with the company taking on transit exposure that other owners may avoid.
Hormuz Shuttles Change The Route
One operating model uses short-haul lift from Gulf terminals through the strait to waters near Fujairah and Oman.
Cargoes can then be transferred at sea to long-haul tankers that avoid entering Hormuz, turning regional shuttle capacity into the scarce asset.
Lloyd's List Intelligence described transportation capacity as a strategic asset for national oil companies.
Kuwait Petroleum has established a similar shuttle system because Kuwait's export terminals are inside the Gulf and seaborne crude must pass through Hormuz before onward shipment.
Saudi Arabia has more optionality.
Its East-West pipeline can move crude produced in the east of the kingdom to Yanbu on the Red Sea, and national shipping company Bahri operates one of the world's largest VLCC fleets for Saudi Aramco.
Freight Rates Show The Strain
Chinese state-owned carriers Cosco and China Merchants have largely avoided Red Sea and Hormuz trade after instructions from authorities, Cichen Shen of Lloyd's List told an industry call.
A smaller core group of operators continues to run through the crisis.
The freight market is pricing that constraint.
Daily earnings for crude carriers on the main Middle East Gulf-to-China benchmark have risen from about $286,500 a day in early July to more than half a million dollars.
