ADNOC Logistics & Services (ADNOC L&S) has entered into a charter agreement with Singapore’s Atlantic Gulf & Pacific (AG&P) to use the LNG carrier, Al Khaznah, as a floating storage unit (FSU). The agreement is for a minimum of 15 years, but has the possibility of a further five year extension built in.
The aim of the transaction, says ANDOC L&S, is to unlock value from one of its maturing assets and highlights the company’s strategy of creatively diversifying both its customer base and revenue streams.
Under the terms of the agreement AG&P will make use of Al Khaznah, originally built in 1994, to store LNG at its Karaikal LNG import terminal, which is located 320 km south of Chennai in India.
The vessel is one of eight LNG vessels currently operated by ADNOC L&S and is at present operating under contract with ADNOC LNG, another subsidiary of ADNOC. This contract comes to an end in 2021 after which AG&P will deploy it as a floating storage facility. This is expected to extend the vessel’s employment life by at least 15 years, offering ADNOC L&S a new revenue stream for a vessel which may otherwise have had ‘deployment challenges’ after 25 years in service.
According to Abdulkareem Al Masabi, CEO of ADNOC L&S, “This agreement with Atlantic Gulf & Pacific is significant for ADNOC Logistics & Services in a number of ways. Firstly, it represents our inaugural agreement with AG&P and supports our company’s goal of securing new alliances that enable smart growth. It also maximises value from one of our maturing assets, while also providing AG&P with a flexible storage solution for their LNG terminal.”