ADSB takes leap of faith with entry into depressed oil and gas sector
SEE ALSO: Oil prices impacting GCC rail sector
SEE ALSO: Bahri orders five more oil tankers
Abu Dhabi Ship Building (ADSB) has expanded its services portfolio to the oil and gas industry, betting on a lower oil price in 2018 to spur demand for its services.
“Today, the supermajors and national oil companies are tightening their spending. Investments into new offshore and onshore assets are being put on hold, and are instead funneling their spending into routine maintenance work—a core ADSB capability,” said Khaled Al Mazrouei, CEO of ADSB.
This is the company’s first foray outside of the naval, marine and defence sector, as it seeks opportunities beyond its traditional industries of focus.
“With ADSB’s strong performance and recent win on providing marine support services for the UAE’s naval fleet, we are leveraging our relationships with our core government clients in the region to move into a new industry, as we feel that oil and gas has the potential to grow our business beyond ship building,” Al Mazrouei added.
“When the oil and gas industry finally gathers its momentum for major refurbishments and upgrades, there will be a huge demand on shipyards like ours. Our move into this sector demonstrates that we are gearing ourselves to meet this challenge,” he added, when asked if the current market was the right time for such a move.
Following a review of its operations in 2014, ADSB implemented a new business strategy which aimed to broaden the shipyard’s traditional customer base. Since then, the company has turned its fortunes around: net profit climbed to AED 71m ($19.2m) in 2016 from an AED 90.6 million loss in 2014. Last year, the shipyard docked, repaired and serviced 285 vessels.
Over the past year the company has completed six oil and gas projects from regional, national and international companies. Its local client base has grown to 135 from 31 UAE entities within the last three years, with its international customer portfolio growing tenfold in the same period.
The shipyard is tapping into new revenue streams in the merchant and offshore sectors, and has partnered with international marine sales services and agents in 17 countries that promote new build and repair services on behalf of the company.
“We are optimistic about the future,” concluded Al Mazrouei. “We have the expertise and experience in some sectors. We are confident that our 1,200-strong team can expand our capabilities to ensure the longevity of our organization, while helping our customers realize their business goals.”