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Abu Dhabi National Oil Co. or ADNOC and Abu Dhabi National Energy Co. also known as TAQA, on Thursday announced a $3.6 billion strategic project that will drive their sustainability efforts and support UAE's net zero initiatives.
The project, which aims to power and decarbonize the state oil producer’s offshore operations, will develop a high-voltage, direct current (HVDC-VSC) subsea transmission system in the Middle East and North Africa (MENA) region.
"It will power ADNOC’s offshore production operations with cleaner and more efficient energy, delivered through the Abu Dhabi onshore power grid, owned and operated by TAQA’s transmission and distribution companies," the companies said in a statement.
The project will be funded through a special purpose vehicle (SPV), that will be jointly owned by ADNOC and TAQA (30 percent stake each), and a consortium comprised of Korea Electric Power Corporation (KEPCO), Japan’s Kyushu Electric Power Co. and Électricité de France (EDF).
The consortium, led by KEPCO, will hold a combined 40 percent stake in the project on a build, own, operate and transfer basis. It will develop and operate the 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, the statement added.
The development is expected to reduce the carbon footprint of ADNOC’s offshore operations by more than 30 percent.
Yaser Saeed Almazrouei, ADNOC Upstream Executive Director, said: "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.”
More than 50 percent of the project value will flow back into the UAE’s economy under ADNOC’s In-Country Value (ICV) program, it said.
The transmission system will have a total installed capacity of 3.2 gigawatts (GW) and 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.
The project also offers the potential for ADNOC to more effectively utilize its gas – currently used to power the offshore facilities – for higher-value purposes, allowing ADNOC to generate additional revenue.
(Reporting by Brinda Darasha; editing by Seban Scaria)
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