Adnoc’s logistics arm plans global expansion with Zakher Marine International acquisition

The addition of Zakher Marine International (ZMI) will help Adnoc Logistics and Services to expand into global markets, the Adnoc subsidiary’s chief executive has said.

Adnoc L&S successfully closed its acquisition of the offshore vessel operator on Thursday after the deal was first announced in July.

“Just by acquiring ZMI, we have jumped straightaway from being a regional player to a global player,” Abdulkareem Al Masabi told The National.

“We will be able to deliver value-creation services to our customers that we were not able to do before.”

Adnoc L&S will add 24 jack-up barges and 38 offshore support vessels from ZMI, boosting its fleet size to more than 300 units.

ZMI, which will operate as an independent entity under Adnoc L&S, is the world’s largest owner and operator of self-propelled jack-up barges, with operations in the UAE, Saudi Arabia, Qatar and China. The group was established in Abu Dhabi in 1984 and has significantly grown its diverse fleet range supporting the regional and global offshore oil and gas and renewable markets.

The deal comes against the backdrop of high oil prices.

Brent, the benchmark for two-thirds of the world’s oil, has gained nearly 13 per cent in the past 12 months, despite concerns of an economic slowdown.

“The oil prices are a driver for all things oil and gas, but more importantly, you need to look at the underinvestment that has occurred over the last decade or so in the offshore space,” said Ali El Ali, chief executive of ZMI.

“The UAE and the GCC probably are the only areas that have been investing sustainably over the last decade but if you look at the underdevelopment and underinvestment across the globe … that in itself is creating a natural bottleneck.”

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

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

Adnoc L&S, formed after the merger of three Adnoc units in 2016, has the largest and most diversified fleet in the Middle East, with more than 300 vessels transporting crude oil, refined products, dry bulk, containerised cargo, liquefied petroleum gas and liquefied natural gas to global markets.

In August, Adnoc signed a $1.17 billion contract with Adnoc L&S to boost offshore production capacity.

Adnoc plans to significantly increase its investment in hydrocarbons and raise its output capacity to five million barrels per day by 2030.

Last year, Adnoc's board approved plans to spend Dh466 billion ($126.8 billion) between 2022 and 2026 on expanding its upstream production capacity and downstream portfolio, as well as its low-carbon fuels business and clean energy ambitions.

“We're always talking about transitioning [to clean energy] but transitioning will only happen over time,” said Mr Al Masabi.

“Adnoc is taking a very responsible and pragmatic approach but definitely with a very rigid road map to execute.”