Adnoc, Taqa plan $3.6bn project to decarbonise offshore ops
ABU DHABI, December 22, 2021
Abu Dhabi National Oil Company (Adnoc) and Abu Dhabi National Energy Company (Taqa) have announced a $3.6 billion strategic project to significantly decarbonise Adnoc’s offshore production operations, further strengthening their position in driving and leading sustainability efforts and supporting the UAE ‘Net-Zero by 2050 Strategic Initiative’.
The innovative project will see the development and operation of a first-of-its-kind high-voltage, direct current (HVDC-VSC) subsea transmission system in the Middle East and North Africa region.
It will power Adnoc’s offshore production operations with cleaner and more efficient energy, delivered through the Abu Dhabi onshore power grid, owned and operated by Taqa’s transmission and distribution companies.
The transmission system will have a total installed capacity of 3.2 Gigawatts (GW) and comprise two independent sub-sea HVDC links and converter stations that will connect to Taqa’s onshore electricity grid – operated by its subsidiary, Abu Dhabi Transmission and Despatch Company (Transco).
The project will be funded through a special purpose vehicle (SPV), a dedicated company that will be jointly owned by the duo with 30% stake each, and a consortium comprising Korea Electric Power Corporation (Kepco), Japan’s Kyushu Electric Power Company and Électricité de France (EDF).
This project offers the potential for Adnoc to more effectively utilise its rich gas – currently used to power the offshore facilities – for higher-value purposes, allowing Adnoc to generate additional revenue.
A tender for this innovative project was issued in April 2020 resulting in very strong interest from international companies. Following this highly competitive tender process the consortium was selected.
Led by Kepco, the consortium will hold a combined 40 percent stake in the project on a build, own, operate and transfer basis.
The consortium will develop and operate the state-of-the-art transmission system alongside Adnoc and Taqa, with the full project being returned to Adnoc after 35 years of operation.
Construction is expected to begin in 2022 with commercial operation commencing in 2025.
Adnoc Upstream Executive Director Yaser Saeed Almazrouei said: "We are delighted to be collaborating again with Taqa, as we jointly welcome world-class industry leaders in yet another landmark transaction that will see Adnoc make a significant step forward in our ongoing decarbonisation journey."
"As Adnoc embraces the energy transition, this bold and progressive project will replace our existing offshore local power supply with cleaner and more sustainable onshore power sources, significantly reducing our carbon footprint while enabling additional cost savings," he noted.
"This first-of-its-kind project is a further example of how Adnoc is advancing practical and commercially viable solutions to secure a lower carbon future, while driving significant foreign direct invesment, and, in turn, cementing Abu Dhabi and the UAE’s position as a trusted global investment destination," he added.
More than 50% of the project value will flow back into the UAE’s economy under Adnoc’s In-Country Value (ICV) program, underpinning Adnoc and Taqa’s commitment to driving responsible and sustained investment and value creation for Abu Dhabi and the UAE.
Taqa Group CEO and Managing Director Jasim Husain Thabet said: "As the recognised low carbon power and water champion of Abu Dhabi and one of the top 5 utilities in EMEA by market value, we are pleased to again partner with Adnoc on such an important project that will contribute to the decarbonisation of Abu Dhabi’s energy industry in such an impactful way."
"This first-of-its-kind project shows how the UAE continues to demonstrate its strong leadership and innovation in the global energy transition by bringing together critical players to boost sustainability credentials and maximizing the utilisation of Abu Dhabi’s diverse and efficient energy mix," he stated.
"Decarbonisation continues to provide social and economic opportunities for collaboration and growth, which Taqa is actively pursuing through its strategic alliances and partnerships in the market," he added.
Kepco President and CEO Seung-il Cheong said: "It is truly an honor to participate in this strategic project with Adnoc. As the Barakah Nuclear Power Project has become a token of long friendship and cooperation between the UAE and Korea, Kepco will strive for the successful completion of this Project and contribute to the ‘2050 Net-Zero Initiative’ of the UAE."
Kyushu Electric Power Company President and CEO Kazuhiro Ikebe expressed delight at being selected as a business partner for this project.
"We are pleased that the realisation of this project will contribute to the reduction of CO2 emissions at Adnoc's oil production facilities by more than 30%. Our Group has just announced an action plan for carbon neutrality, and we are determined to promote energy businesses that contribute to the reduction of carbon emissions globally. We hope to contribute to the stable operation of this project by utilizing the know-how we have cultivated in the electric power business in Japan and overseas," he noted.
EDF Chairman and CEO Jean-Bernard Lévy said: "We are grateful to have been awarded such a contract by Adnoc and TAQA in the UAE within the successful consortium, which can rely on EDF’s robust transmission engineering expertise."
"EDF is proud to be part of this innovative project that significantly contributes to decarbonise Adnoc operations," he added.-TradeArabia News Service
