Two UAE giants launch ‘first-of-its-kind’ project worth $3.6 bln to decarbonise offshore ops
Two United Arab Emirates-controlled oil and gas giants have revealed a $3.6 billion project to decarbonise offshore operations as part of their efforts to reach the net-zero goals by 2050.
Abu Dhabi National Energy Company (TAQA) and Abu Dhabi National Oil Company (ADNOC) announced on Wednesday a $3.6 billion strategic project to significantly decarbonise ADNOC’s offshore production operations, in a push to strengthen their position in driving sustainability efforts and support the United Arab Emirates’ Net-Zero by 2050 Strategic Initiative.
According to the two companies, the project will see the development and operation of what they claim is 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.
A tender for this project, which was issued in April 2020, resulted in very strong interest from international companies and a very competitive process.
The project will be funded through a special purpose vehicle (SPV) – a dedicated company that will be jointly owned by TAQA and ADNOC with a 30 per cent 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 per cent stake in the project on a build, own, operate and transfer basis.
The consortium, selected following the tender process, will develop and operate the transmission system alongside TAQA and ADNOC, with the full project being returned to ADNOC after 35 years of operation.
The project, which is subject to relevant regulatory approvals, 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.
As explained by the two companies, the development is expected to reduce the carbon footprint of ADNOC’s offshore operations by more than 30 per cent, replacing existing offshore gas turbine generators with more sustainable power sources available on the Abu Dhabi onshore power network.
The transmission system will have a total installed capacity of 3.2 gigawatts (GW) and comprise two independent subsea 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). Construction is expected to begin in 2022 with commercial operation starting in 2025.
Yaser Saeed Almazrouei, ADNOC Upstream Executive Director, said: “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.
“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 investment, and, in turn, cementing Abu Dhabi and the UAE’s position as a trusted global investment destination.”