Abu Dhabi National Oil Company (Adnoc) and compatriot Taqa have awarded a $3.6 billion contract to a consortium led by Korea Electric Power Corporation (Kepco) for work on a giant subsea power transmission system aimed at driving down carbon emissions at the state-owned giant's offshore oil and gas facilities.

Adnoc confirmed the award on 22 December and said the project will be funded through a “special purpose vehicle (SPV) – a dedicated company that will be jointly owned by Adnoc and Taqa”, each holding a 30% stake, with the balance held by a consortium comprising Korea Electric Power Corporation, Japan’s Kyushu Electric Power and Electricite de France (EDF).

“Led by Kepco, the consortium will hold a combined 40% stake in the project on a build, own, operate and transfer basis,” the company said.

The emirati state-owned giant said that the Kepco led “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,” it added.

The award of the massive Lightning project confirms a recent report by Upstream that had tipped the Kepco-led consortium as the frontrunner for the offshore subsea power project.

Subsea transmission system

Adnoc said the “innovative 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 (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, it noted.

The subsea development is “expected to reduce the carbon footprint of Adnoc’s offshore operations by more than 30%, replacing existing offshore gas turbine generators with more sustainable power sources available on the Abu Dhabi onshore power network,” the Abu Dhabi giant said.

“This progressive and collaborative approach will also drive operational efficiencies and improve system reliability of energy supply while offering the potential for power supply cost optimization,” it added.

Reducing carbon footprint

Yaser Saeed Almazrouei, Adnoc’s upstream executive director, said that as the company embraces the energy transition, the project will replace the “existing offshore local power supply with cleaner and more sustainable onshore power sources”, significantly reducing its carbon footprint while enabling additional cost savings.

The giant subsea transmission system will have a “total installed capacity of 3.2 gigawatts (GW) and comprise two independent subsea 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 on the offshore project is expected to begin next year with commercial operation expected to commence by 2025, Adnoc said.

Bidders in fray

The Kepco-led consortium had edged out three other contracting groups in the tender process for the subsea transmission project, Upstream understands.

These include a pairing of China’s Offshore Oil Engineering Company (COOEC) with compatriot China Southern Power Grid Company, a consortium of UK-headquartered Petrofac with Belgian player Elia, and a consortium of Indian engineering giant Larsen & Toubro and Japan’s Kansai Electric.

The tender process for the subsea transmission project was initiated last year by Adnoc and compatriot ADPower.

Reducing the carbon intensity at its offshore operations is a key focus for Abu Dhabi as the emirate aims to increase its oil output capacity to 5 million barrels per day by 2030, from the current level of about 4 million bpd.

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