Abu Dhabi National Oil Company (Adnoc) and Abu Dhabi National Energy Company (Taqa) have signed a $3.6 billion (Dh13.2 billion) deal to power and significantly decarbonise Adnoc’s offshore production operations to support the UAE’s “Net-Zero by 2050 Strategic Initiative.”

The project will see the development and operation of a first-of-its-kind high-voltage, direct current (HVDC-VSC) subsea transmission system in the Middle East and North Africa region.

It will power Adnoc’s offshore production operations with cleaner energy, delivered through the Abu Dhabi onshore power grid, owned and operated by Taqa’s transmission and distribution companies.

The project will be funded through a special purpose vehicle (SPV) - a dedicated company that will be jointly owned by Adnoc and Taqa (30 per cent stake each), and a consortium comprised of Korea Electric Power Corporation (Kepco), Japan’s Kyushu Electric Power Co. and Électricité de France (EDF). Led by Kepco, the consortium will hold a combined 40 per cent stake in the project on a build, own, operate and transfer basis.

The consortium will develop and operate the state-of-the-art 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 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 available on the Abu Dhabi onshore power network.

Yaser Saeed Almazrouei, Adnoc Upstream executive director, said: “As Adnoc embraces the energy transition, this bold and progressive project will replace our existing offshore local power supply with cleaner and more sustainable onshore power sources, significantly reducing our carbon footprint while enabling additional cost savings.”

More than 50 per cent of the project value will flow back into the UAE’s economy under Adnoc’s In-Country Value (ICV) programme.

Jasim Husain Thabet, Taqa’s Group CEO and managing director, said: “This first-of-its-kind project shows how the UAE continues to demonstrate its strong leadership and innovation in the global energy transition by bringing together critical players to boost sustainability credentials and maximising the utilisation of Abu Dhabi’s diverse and efficient energy mix.”

Seung-il Cheong, president and CEO of Kepco, said: “As the Barakah Nuclear Power Project has become a token of long friendship and cooperation between the UAE and Korea, Kepco will strive for the successful completion of this project and contribute to the ‘2050 Net-Zero Initiative’ of the UAE.”

The transmission system will have a total installed capacity of 3.2 Gigawatts (GW) 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). 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 rich gas - currently used to power the offshore facilities - for higher-value purposes, allowing Adnoc to generate additional revenue.

A tender for this innovative project was issued in April 2020 resulting in very strong interest from international companies. Following this highly competitive tender process, the consortium was selected.

This project follows the recently announced global clean energy venture between Taqa, Adnoc and Mubadala, targeting a total generating capacity of at least 50 GW of renewable energy by 2030, and the landmark clean energy partnership with EWEC, which will see up to 100 per cent of Adnoc’s onshore and more than 90 per cent of Adnoc’s offshore production operations supplied by EWEC’s nuclear and solar clean energy sources.