Abu Dhabi National Oil Company and Abu Dhabi National Energy Company, known as Taqa, launched a $3.6 billion renewable energy project to significantly decarbonise the state-owned oil and gas producer’s offshore production operations and help the UAE achieve its 2050 net-zero ambitions.
The companies are developing and will operate the first high-voltage, direct current (HVDC-VSC) subsea transmission system in the Mena region, Adnoc said on Wednesday.
The transmission system will power Adnoc’s offshore production operations with cleaner and more efficient energy, to be delivered through the Taqa-owned Abu Dhabi onshore power grid.
The project will be funded through a dedicated company in which Adnoc and Taqa will each own a 30 per cent stake. A Korea Electric Power Corporation-led consortium, which includes Japan’s Kyushu Electric Power Company and Électricité de France, will hold a combined 40 per cent stake in the project on a build, own, operate and transfer basis, Adnoc said.
The consortium will develop and operate a transmission system alongside Adnoc and Taqa, with the full project to be returned to Adnoc after 35 years of operation.
“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,” said Yaser Almazrouei, Adnoc upstream executive director.
“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.”
The transmission system will have a total installed capacity of 3.2 gigawatts 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. Construction is expected to begin in 2022, with commercial operation commencing in 2025, Adnoc said.
The project also offers the potential for Adnoc to more effectively utilise its rich gas – currently being used to power the offshore production facilities – for higher-value purposes that will allow the company to generate additional revenue.
The development is expected to reduce Adnoc’s offshore operations carbon footprint by more than 30 per cent, replacing existing offshore gas turbine generators with more sustainable power sources from the Abu Dhabi onshore power network. It will also drive operational efficiencies and improve system reliability of energy supply, as well as power supply cost optimisation, the company said.
The 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 maximising the utilisation of Abu Dhabi’s diverse and efficient energy mix”, said Jasim Thabet, Taqa’s group chief executive and managing director.
“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.”
The UAE, which is set to host Cop28 in 2023, earlier this year became the first country in the Middle East and North Africa region to adopt a strategy to achieve net-zero carbon emissions by 2050. As part of its net-zero strategy, the UAE plans to invest Dh600bn ($163.48bn) in clean and renewable energy sources over the next three decades.
The move to develop the transmission project follows a December 1 announcement that Adnoc and Taqa would join Mubadala Investment Company to become shareholders in Masdar, a step that will help increase the clean energy company's renewable power capacity to more than 50 gigawatts by 2030.
In October, Adnoc said it would meet up to 100 per cent of its power requirements from solar and nuclear after an agreement with Emirates Water and Electricity Company. Adnoc also plans to become the first oil and gas company in the world to completely decarbonise its electric grid at scale, it said.
Adnoc said its partnership with international consortium of developers for the project is bringing in “significant foreign direct investment” and further cements Abu Dhabi and the UAE as a “trusted global investment destination”.
More than 50 per cent of the project will flow back into the UAE’s economy under Adnoc's in-country value programme, driving responsible local investment and value creation, the company said.