Adnoc has allocated $15 billion to invest in a range of projects by 2030, which will help it accelerate its low-carbon growth strategy.
The state-owned energy company will invest in clean power, carbon capture and storage, further electrification of operations, energy efficiency and new measures to build on its policy of zero routine gas flaring, the company said in a statement on Thursday.
“Adnoc continues to take significant steps to make today’s energy cleaner while investing in the clean energies and new technologies of tomorrow,” Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and Adnoc group chief executive, said.
“Now, more than ever, the world needs a practical and responsible approach to the energy transition that is both pro-growth and pro-climate, and Adnoc is delivering tangible actions in support of both these goals.”
Adnoc is preparing for a “major” investment to capture emissions at its Habshan gas processing facility. It forms part of its plan to increase its carbon capture capacity to five million tonnes per annum by the end of the decade, the company said.
Adnoc also said it aims to deploy new technologies to capture and store carbon dioxide by leveraging the UAE’s geological properties.
The company’s Al Reyadah carbon capture plant, which was completed in 2016, has a capacity of 800,000 tonnes per year.
“Cementing our strong track record of responsible and reliable energy production, Adnoc will fast-track significant investments into landmark clean energy, low-carbon and decarbonisation technology projects,” said Dr Al Jaber.
“As we continue to future-proof our business, we invite technology and industry leaders to partner with us, to collectively drive real and meaningful action that embraces the energy transition.”
Adnoc will apply a “rigorous” commercial and sustainability assessment to ensure that each project delivers “lasting tangible impact”, the company said.
Last month, Adnoc said it was setting up a new low-carbon solutions and international growth vertical, which will focus on renewable energy, clean hydrogen and carbon capture and storage, as well as international expansion in gas, liquefied natural gas and chemicals.
The company, responsible for most of the UAE’s oil and gas output, has been investing heavily in the production of natural gas and hydrogen as the Arab country looks to reach net-zero emissions by 2050.
Adnoc is already a major producer of hydrogen and ammonia, with more than 300,000 tonnes of hydrogen produced a year at its Ruwais Industrial Complex.
Last year, Adnoc approved a Dh550 billion ($150 billion) budget for the next five years as the company prepares to set up its gas subsidiary and list its shares on the Abu Dhabi Securities Exchange next year.
The company’s board endorsed plans to bring forward the expansion of Adnoc’s production capacity, currently at five million barrels per day, to 2027, from the previous target of 2030.
Adnoc said the expansion of its new energy portfolio will largely be delivered through its stake in Abu Dhabi's clean energy company Masdar, which plans to increase its capacity to 100 gigawatts by 2030, from 20 gigawatts currently.
In December, Abu Dhabi National Energy Company, better known as Taqa, Mubadala Investment Company and Adnoc completed a deal to become shareholders in Masdar.
Established by Mubadala in 2006, Masdar took a leadership role in the global energy sector and also helped to drive the nation’s economic diversification and climate action agenda.
Masdar currently operates in 40 countries and has a total investment of about $20 billion.
Adnoc also said it had been meeting 100 per cent of its power requirements from solar and nuclear since January 2022, following an agreement with the Emirates Water and Electricity Company.
In September, Adnoc and Taqa closed a $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 and operate a sub-sea transmission system alongside Adnoc and Taqa.
The development is expected to reduce the carbon footprint of Adnoc's offshore operations by up to 50 per cent, replacing existing offshore gas turbine generators with more sustainable power sources from the Abu Dhabi onshore power network.
Adnoc has set a new methane emissions target for its upstream unit as part of its efforts to reduce its overall greenhouse gas emissions.
The company aims to have the “Middle East’s lowest” methane intensity target of 0.15 per cent by 2025.
The UAE plans to invest $160 billion in clean and renewable energy sources over the next three decades.
It is building the five-gigawatt Mohammed Bin Rashid Al Maktoum Solar Park in Dubai. Abu Dhabi, which is developing a two-gigawatt solar plant in its Al Dhafra region, has set a target of 5.6 gigawatts of solar photovoltaic capacity by 2026.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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