Abu Dhabi National Oil Company (ADNOC) and Abu Dhabi National Energy Company (TAQA) announced Wednesday a $3.6 billion (AED13.22 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 (MENA) 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 project will be funded through a special purpose vehicle (SPV) – a dedicated company that will be jointly owned by ADNOC and TAQA (30 percent stake each), and a consortium comprised of Korea Electric Power Corporation (KEPCO), Japan’s Kyushu Electric Power Co. and Électricité de France (EDF). 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. The project is subject to relevant regulatory approvals.
The development is expected to reduce the carbon footprint of ADNOC’s offshore operations by more than 30 percent, replacing existing offshore gas turbine generators with more sustainable power sources available on the Abu Dhabi onshore power network. This progressive and collaborative approach will also drive operational efficiencies and improve system reliability of energy supply, while offering the potential for power supply cost optimisation.
“ADNOC is 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,” Yaser Saeed Almazrouei, ADNOC Upstream Executive Director, said. “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.”
More than 50 percent 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.
Jasim Husain Thabet, TAQA’s Group CEO and Managing Director, said that TAQA is pleased to again partner with ADNOC on a project to decarbonise Abu Dhabi’s energy industry.
“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,” Thabet said.
The project also 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.
This project follows the recently announced global clean energy venture between TAQA, ADNOC and Mubadala, targeting a total generating capacity of at least 50 GW of renewable energy by 2030, and the landmark clean energy partnership with EWEC, which will see up to 100% of ADNOC’s onshore and more than 90% of ADNOC’s offshore production operations supplied by EWEC’s nuclear and solar clean energy sources.