Adnoc, Taqa close clean energy, decarbonisation deal worth $3.8b

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The innovative project progressed rapidly from concept to development phase, with construction starting in early 2022.

Abu Dhabi National Oil Company (Adnoc) and Abu Dhabi National Energy Company (Taqa) on Friday announced the successful financial closing of their $3.8 billion strategic project to power and significantly decarbonise Adnoc’s offshore production operations.

Together with a consortium comprised of Korea Electric Power (KEPCO), Kyushu Electric Power Company (Kyuden) and Electricité de France (EDF) (the Consortium), this is a first-of-its-kind high-voltage direct current (HVDC) sub-sea transmission network in the Mena region.

The innovative project progressed rapidly from concept to development phase, with construction starting in early 2022, underscoring both Adnoc and Taqa’s leading positions to drive climate action and support the “UAE Net-Zero by 2050 Strategic Initiative”.

The consortium will build, own, operate and transfer the state-of-the-art transmission system alongside Adnoc and Taqa, with the full project returned to Adnoc after 35 years of operation.

Commenting on the successful financial closing of the transaction, Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, Special Envoy for Climate Change and Managing Director and Group CEO of Adnoc, said, “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 decarbonise 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.” The 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, operated by Taqa’s wholly owned subsidiary, Abu Dhabi Transmission and Despatch Company (TRANSCO).

Mohamed Hassan Alsuwaidi, Chairman of Taqa, stated, “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.” More than 50% of the value of this project will flow back into the UAE’s economy under Adnoc’s hugely successful In-Country Value (ICV) programme. This landmark transaction also sets another benchmark for large-scale investment into the UAE and Adnoc from leading global energy companies and reinforces Adnoc’s focus and role as a catalyst for responsible and sustainable investment and value creation for Abu Dhabi and the UAE.

Taqa has significant investments in power and water generation, transmission and distribution assets, as well as upstream and midstream oil and gas operations.

Taqa announced recently that the Mirfa International Power & Water Company (MIPCO), the project company that owns and operates the Mirfa Power & Water Plant (Mirfa IWPP), successfully completed refinancing of Dhs4 billion ($1.09 billion).

This long-term financing is denominated in USD and is slated to mature on September 30, 2042. Nine international and regional lenders participated in this refinancing.

The syndicate of mandated lead arrangers comprised Abu Dhabi Commercial Bank, Bank of China (Dubai) Branch, First Abu Dhabi Bank, KfW IPEX-Bank GMBH, The Norinchukin Bank, Saudi National Bank, Shinsei Bank, Sumitomo Mitsui Banking Corporation and Sumitomo Mitsui Trust Bank.

The proceeds from the new long-term senior secured loan were utilised to refinance the Abu Dhabi-based power and water company’s existing debt facilities, which were established in 2014 as part of a soft-mini perm structure, an increasingly popular financing model within the region’s utility sector.

Farid Al Awlaqi, Executive Director of Generation at Taqa Group, commented: “Taqa Group is committed to securing competitive finance for our assets to maximise returns for our shareholders and business partners. The refinancing of more than $1 billion of MIPCO’s debt facilities showcases the hard work of many of our stakeholders and the appetite for funding major utility projects in Abu Dhabi, at which Taqa is at the helm.”

Frederic Claux, Managing Director, Thermal and Supply AMEA, ENGIE, said: “As a leading independent power and desalination water developer and producer in the GCC, at ENGIE, we are delighted to announce this refinancing deal for our Mirfa independent water and power plant in Abu Dhabi. Not only does this demonstrate our track record in structuring large and complex financing transactions to provide greater security for our shareholders, but also our commitment to meeting the growing demand for electricity and water in the region and reconciling economic performance with a positive impact on people and the planet.”

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