Abu Dhabi National Oil Company (Adnoc) is nearing the decision phase for a substantial subsea power transmission project aimed at driving down carbon emissions at the state-owned giant's offshore facilities.

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

The emirate is currently pumping well below its installed capacity due to the continued output cuts by Opec+, a grouping of Opec and key producers that is aiming to stabilise the oil market amid the effects of the coronavirus pandemic on global demand.

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Multiple people with direct knowledge of the tender process told Upstream that Adnoc is expected later this month to shortlist two key contracting groups for the subsea job, which is widely known as the Lightning project.

“We believe that Adnoc is close to shortlisting two contenders and is expected to award the prized contract during the first half of this year,” one person said.

Improved confidence

A second person suggested that a significant improvement in crude prices this year has given Adnoc fresh optimism to progress on the project, which has been delayed by several months.

In response to a request for comment, an Adnoc spokesperson told Upstream the company "does not comment on market speculation" and "will communicate when we make an award".

The tender process for the subsea transmission project was initiated last year by Adnoc and compatriot Abu Dhabi Power Corporation (ADPower), but its progress was hindered by low crude prices and the coronavirus pandemic.

The project aims to “develop and operate the region’s first high-voltage, direct current (HVDC) subsea transmission system" that will connect Adnoc’s offshore production facilities to ADPower’s onshore electricity grid.

Lower-carbon footprint

The offshore power transmission project is expected to reduce the carbon footprint of Adnoc's offshore facilities by up to 30% and would optimise power supply cost for the facilities.

At least four leading international contracting groups had earlier submitted commercial offers to Adnoc last year for the offshore project.

Those believed to be among the contenders include a grouping 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, another consortium of Indian engineering giant Larsen & Toubro (L&T) and Japan’s Kansai Electric, and a fourth grouping of South Korea’s Samsung, Kepco Electric and EDF of France.

Out of the four contenders, two groups are said to have an edge over other players, one person said. Those include the L&T-Kansai and Samsung-Kepco-EDF grouping, he added.

However, another person said that all four contenders are still in with a chance of landing the deal.

Workscope details

The transmission system will comprise two independent subsea HVDC transmission links and converter stations that will connect to ADPower’s onshore electricity grid and provide a total installed capacity of 3200 megawatts, Adnoc earlier said.

The project will be “replacing the existing offshore localised gas turbine generators with diverse, more efficient and environmentally sustainable sources of energy, including renewable and nuclear power”.

Adnoc has claimed the project would allow it to utilise its rich gas — currently used to power offshore facilities — for higher-value purposes, which could generate more revenues for the company.

Yaser Saeed al Mazrouei, Adnoc's upstream executive director, said last year that the project "will meet its future offshore power needs, even as the fields mature, using diverse and sustainable sources".

BOOT basis

The preferred contractor will be responsible for developing the project on a build, own, operate and transfer (BOOT) basis, a model that is now increasingly being followed by state-owned companies in the region.

The project is likely to be operational by 2025 and will be funded through a special-purpose vehicle jointly owned by Adnoc and ADPower each with 30%, and the selected developers and investors with 40%, Adnoc said last year.

Another grouping of Italy’s Saipem and Terna was also believed to have submitted an offer earlier, but Saipem is believed to have later withdrawn from the tender process.