Financial close in place for $3.8 billion decarbonization project in UAE
Abu Dhabi National Oil Company (ADNOC) and Abu Dhabi National Energy Company PJSC (TAQA) have completed the financial closing of what is said to be the first-of-its-kind subsea transmission network in the MENA region.
The $3.8 billion strategic project is set to power and significantly decarbonize ADNOC’s offshore production operations, as well as support the UAE’s Net Zero by 2050 Strategic Initiative.
The consortium comprising Korea Electric Power (KEPCO), Kyushu Electric Power Company (Kyuden) and Électricité de France (EDF) will build, own, operate and transfer the transmission system alongside ADNOC and TAQA, with the full project being returned to ADNOC after 35 years of operation.
The development is expected to reduce the carbon footprint of ADNOC’s offshore operations by more than 30%, replacing existing offshore gas turbine generators with more sustainable power sources available on the Abu Dhabi onshore power network, operated by TAQA’s wholly owned subsidiary Abu Dhabi Transmission and Despatch Company (TRANSCO).
The project developers believe that over half of the value of the project will flow back into the UAE’s economy under ADNOC’s In-Country Value (ICV) program.
“ADNOC has once again demonstrated its ability to successfully structure and close a bold and progressive transaction that will help secure our low-carbon future as we intensify our efforts to decarbonize our operations,” said Dr. Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, Special Envoy for Climate Change and ADNOC’s managing director and group CEO.
“This innovative and first-of-its-kind project in the region is driving responsible and sustainable value creation into Abu Dhabi, further cementing the UAE’s standing as a trusted, go-to investment destination of global capital.”
Combined investment from consortiums, commercial lenders and export credit agencies yielded more than $3 billion in foreign direct investment.
Given higher interest rates at the time of financial closing, total project cost is $3.8 billion, and not $3.6 billion as announced in December 2021.
The transmission system will have a total installed capacity of 3.2 GW and will comprise two independent subsea HVDC links and converter stations.
Commercial operation is expected to commence in 2025, when the project will become the most powerful power-from-shore solution in the MENA region to date, as well as the first HVDC power-from-shore solution outside Norwegian waters.
The KEPCO-led consortium collectively holds a 40% stake in the project on a build, own, operate and transfer (BOOT) basis, with ADNOC and TAQA each owning a 30% stake.
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