UAE state-owned oil company, Abu Dhabi National Oil Company (ADNOC) and Abu Dhabi National Energy Company (TAQA) have unveiled a $3.6 billion strategic project to decarbonize ADNOC’s offshore production operations.
The innovative project also aims to strengthen ADNOC and TAQA’s position in driving and leading sustainability efforts and supporting the UAE’s ‘Net-Zero by 2050 Strategic Initiative’.
As part of the project, a first-of-its-kind high-voltage, direct current (HVDC-VSC) subsea transmission system will be developed and operated in the Middle East and North Africa (MENA) region. This will power ADNOC’s offshore production operations with cleaner energy, which will be delivered through TAQA-owned Abu Dhabi onshore power grid.
The development is expected to reduce the carbon footprint of ADNOC’s offshore operations by over 30 percent, replacing existing offshore gas turbine generators with more sustainable power sources available on the Abu Dhabi onshore power network.
The project will be funded through a special purpose vehicle (SPV), a dedicated company that will be jointly owned by ADNOC and TAQA, with each holding 30 percent stake, and a consortium comprised of Korea Electric Power Corporation (KEPCO), Japan’s Kyushu Electric Power Co. and Electricite de France (EDF). Led by KEPCO, the consortium will hold a combined 40 percent stake in the project.
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.
“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 decarbonization 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.”
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). Construction is expected to begin in 2022 with commercial operation commencing in 2025.
Commenting on the project, Mr. Jasim Husain Thabet, TAQA’s Group CEO and Managing Director, stated, “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 utilization of Abu Dhabi’s diverse and efficient energy mix. Decarbonization 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.”
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.
The project also offers the potential for ADNOC to more effectively utilize its rich gas, currently used to power the offshore facilities, for higher-value purposes, enabling the company to generate additional revenue.