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 percent of the total contract value of the island's dredging, land reclamation and Marine construction will flow back into the UAE economy, Adnoc L&S said in a filing to the ABU Dhabi Stock Exchange on Thursday. "Leveraging our project management expertise, end-to-end logistics solutions and strategic partnerships, Adnoc L&S is well positioned to execute major offshore EPC contracts," said Capt Abdulkareem Al Masabi, its CEO.

This contract award reflects our strategy to open up new areas of growth and demonstrates the expanding range of services we offer our customers. This is the Marine logistics company's first major contract after its ADX listing last week. The company's share price soared 58 percent on its debut on June 1 and was finally priced at AED 2.01 per share, the high end of a previously announced range of AED 1.99 per share.

This gave Adnoc L&S a market value of about $4.05 billion at the time of listing. This is the second ADNOC unit to hit the market in 2023 and the sixth to date. ADNOC L&S is the second largest listed company in the Middle East in 2023, behind the IPO of ADNOC Gas in March. The EPC market is expected to see substantial growth in the region in the coming years, the company said. In March, Adnoc L&S launched its global Integrated Logistics Services platform and signed a $2.6 billion contract with Adnoc Offshore to provide logistics services.

The platform is one of the largest turnkey offshore logistics offerings in the world and will enable Adnoc L&S to coordinate the 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 with 245 vessels and manages more than 600 vessels per year. Its fleet and an integrated logistics base of 1.5 million square meters make it a global maritime leader.

Adnoc L&S expects medium-term growth in average annual earnings before interest, tax, depreciation and amortization to be in the low teens. The company said this growth will be driven by new contract awards, further expansion of the integrated logistics services platform and optimised reuse of jack-up barges. ADNOC L&S reported a net profit of $144.9 million for the first quarter of 2023, up 79% from the same period in 2022. Revenue for the period grew to $592.18 million from $312.96 million a year ago. The company could consider expanding its presence in the wider Gulf Cooperation Council region, Chief Financial Officer Nicholas Gleeson said in an interview.

"Thanks to the acquisition of Zakher Marine, we now already have offices in Qatar and Saudi Arabia, so it is definitely attractive to use these offices to expand our reach and expand into these regions," he said. In July 2022, ADNOC L&S acquired Zakher Marine International, an ABU Dhabi company that owns and operates offshore support vessels.Editor/XingWentao