September 29 -- Abu Dhabi National Oil Company (ADNOC) and Abu Dhabi National Energy Company (TAQA) have announced the financial closing of their $3.8 billion project to power and significantly decarbonize ADNOC’s offshore production operations.
Together with a consortium comprised of Korea Electric Power (KEPCO), Kyushu Electric Power Company (Kyuden), and Électricité de France (EDF), they are undertaking a ‘first-of-its-kind’ high-voltage direct current (HVDC) subsea transmission network in the MENA region.
The construction of the project started in early 2022, underscoring both ADNOC and TAQA’s intent to support the ‘UAE Net-Zero by 2050 Strategic Initiative’.
The consortium will build, own, operate, and transfer the transmission system alongside ADNOC and TAQA, with the full project being returned to ADNOC after 35 years of operation.
“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 decarbonize our operations. 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.”
“As the responsible provider of reliable and low-carbon energy, ADNOC will continue to work with our partners to advance practical and commercially viable solutions as the energy transition partner of choice,” Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, Special Envoy for Climate Change and Managing Director and Group CEO of ADNOC, said.
The development is expected to reduce the carbon footprint of ADNOC’s offshore operations by more than 30 percent, replacing existing offshore gas turbine generators with more sustainable power sources available on the Abu Dhabi onshore power network, operated by TAQA’s wholly-owned subsidiary Abu Dhabi Transmission and Despatch Company (TRANSCO).
“TAQA is taking a progressive role in accelerating the UAE’s energy transition by delivering cohesive solutions that enable cleaner sources of power to fuel economic growth. 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. TAQA continues to showcase how its expertise can be utilized to decarbonize industry through strategic partnerships and bringing value to its stakeholders,” Mohamed Hassan Alsuwaidi, Chairman of TAQA, added.
Also, more than 50 percent of the value of this project will flow back into the UAE’s economy under ADNOC’s In-Country Value program.
It is worth noting that this project was initially announced on December 22, 2021. Given higher interest rates at the time of financial closing, the total project cost is $3.8 billion, more than the initially announced $3.6 billion.
The consortium collectively holds a 40 percent stake in the project on a build, own, operate, and transfer basis, with ADNOC and TAQA each owning a 30 percent stake. The transmission system will have a total installed capacity of 3.2 GW and will comprise two independent sub-sea HVDC links and converter stations. Commercial operation is expected to commence in 2025.