Abu Dhabi National Oil Company and Abu Dhabi National Energy Company, better known as Taqa, have closed their $3.8 billion strategic project to power and decarbonise Adnoc's offshore production operations.
A consortium comprising Korea Electric Power (Kepco), Kyushu Electric Power Company (Kyuden) and Electricite de France (EDF), will build, own, operate and transfer (BOOT) the high-voltage direct current (HVDC) sub-sea transmission system alongside Adnoc and Taqa, the two Abu Dhabi companies said in a joint statement on Friday to the Abu Dhabi Securities Exchange.
The Kepco-led group of companies collectively holds a 40 per cent stake in the project on a BOOT basis, with Adnoc and Taqa each owning a 30 per cent stake.
The full project will be returned to Adnoc after 35 years of operation.
Given higher interest rates at the time of financial closing, the project's cost is higher, compared to $3.6bn when it was initially announced in December 2021.
"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 decarbonise our operations," said Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc.
"Adnoc will continue to work with our partners to advance practical and commercially viable solutions as the energy transition partner of choice.”
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 from the Abu Dhabi onshore power network.
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 (Transco).
With construction starting earlier this year, commercial operations of the project are expected to start in 2025, the statement 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.
“Reaching financial close is an important milestone for this distinctive project, which will see Taqa providing Adnoc offshore facilities with low-carbon energy securely and efficiently through Transco’s power network system," said Mohamed Al Suwaidi, chairman of Taqa.
"Taqa continues to showcase how its expertise can be utilised to decarbonise industry through strategic partnerships and bringing value to its stakeholders.”
More than half of the value of the project, which aims to to strengthen Adnoc and Taqa's positions in supporting the UAE’s Net Zero by 2050 strategic initiative, will flow back into the UAE’s economy under Adnoc’s In-Country Value (ICV) programme.
It will also attract large-scale investment into the UAE and Adnoc from global energy companies, reinforcing Adnoc’s role in sustainable investment and value creation for Abu Dhabi and the UAE.
Combined investment from the consortium, commercial lenders and export credit agencies yielded more than $3bn in foreign direct investment, underscoring the UAE’s standing as a trusted global investment destination.
“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,” Dr Al Jaber said.