Masdar signs third carbon deal

Masdar, Abu Dhabi's renewable energy company, has signed a framework agreement with Bahrain's National Oil and Gas Authority (NOGA) to pursue projects to reduce carbon emissions from the production and processing of oil and gas. The pact is the third such agreement the Government-owned enterprise has signed with a state petroleum company, and is an example of how Masdar hopes to profit from its growing expertise in clean energy through making international alliances.

Under the agreement signed yesterday, Masdar and NOGA will identify, study and develop projects they could profitably register under the UN's Clean Development Mechanism (CDM), an international programme that awards tradeable carbon credits for certified reductions in carbon emissions. The CDM framework, which is part of the Kyoto Protocol on climate change, allows companies in developing countries to get paid for investing in such projects. The credits they receive can be sold on Europe's carbon market, and may soon be traded in North America, if the US president, Barack Obama, makes good on plans to implement a carbon cap and trade programme for his country, the world's biggest energy consumer.

Sultan al Jaber, Masdar's chief executive, said yesterday's agreement would utilise the strong ties between the UAE and Bahrain, while promoting environmental responsibility. "This initiative by NOGA will unlock the carbon reduction potential in the oil and gas industry in the region," he said. The chairman of NOGA, Abdul-Hussain bin Ali Mirza, who is also Bahrain's oil minister, said Bahrain shared the Abu Dhabi Government's vision of promoting clean and renewable energy in the Gulf region.

In January, Masdar signed an agreement with the Nigerian National Petroleum Corporation to identify and develop projects in Nigeria's oil and gas sector that they could register with the CDM. In the same month, it announced a similar deal with Abu Dhabi National Oil Company, marking the first time the two Abu Dhabi Government-owned energy concerns had committed to working together to cut carbon emissions.

Last July, Masdar also pledged technical assistance to Gulf Petroleum Industries Company, a petrochemicals venture from Bahrain, in setting up technology to capture 100,000 tonnes of carbon dioxide annually from chemicals plants and combine them with ammonia to make nitrogen fertiliser. In Bahrain and Abu Dhabi, the government-backed partnerships are to focus on projects to increase the energy efficiency of oil and gas production, transportation and processing operations.

In Nigeria, the emphasis will be on projects to reduce the flaring of unwanted gas at oil production and refining facilities. Nigeria vies with Russia for the dubious distinction of flaring the most gas, a practice that not only makes a significant contribution to global emissions of greenhouse gases linked to climate change, but is also economically wasteful. In the Middle East there are so far only a handful of projects registered to sell carbon credits. The largest is a project by Qatar Petroleum to recover gas produced from the Al Shaheen oilfield, with the aim of reducing carbon emissions by 14 million tonnes by 2012.

Masdar's announcement of its deal with NOGA came after a report yesterday in the Manama-based Al Waqt daily newspaper that the King of Bahrain had issued a decree approving a production sharing agreement between the kingdom's Holding Company for Oil and Gas, Abu Dhabi's Mubadala Development and the American oil and chemicals company Occidental Petroleum to boost output from Bahrain's only oilfield.

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