As the dust settled this month on a frenetic six weeks for the Abu Dhabi’s state-owned Adnoc, the shape and scope of the firm’s decarbonisation strategy—and by extension that of its government owner—has become considerably clearer.

Adnoc’s intent to become a major global player not only in blue hydrogen but also in the green variety was shown in a landmark deal to buy into renewables heavyweight Masdar, its sister company and the historic champion of the emirate’s greener side.

Meanwhile, Adnoc’s ambitious but vague pledges to reduce internal emissions from its vast oil and gas operations became firmer via three international and domestic partnership agreements.

Abu Dhabi’s hydrogen strategy barely existed in January when Adnoc, government investment vehicle Mubadala and state holding company ADQ formed the so-called Hydrogen Alliance to develop a roadmap for entry into the sector.

25pc – Adnoc’s target share of clean hydrogen market

In early December, the collaboration evolved into an equity tie-up whereby Adnoc and Taqa, an ADQ company focussed on domestic power generation, will become shareholders in two Masdar units, with the aim of doubling installed renewables capacity to 50GW by 2030 and driving the development of green hydrogen capacity.

Taqa and Abu Dhabi Ports, another ADQ company, provisionally agreed in July to develop a green hydrogen and ammonia plant based on 2GW of solar power at Abu Dhabi’s Khalifa Industrial Zone.

Energy minister Suhail al-Mazrouei used Cop26 in November to put on record Abu Dhabi’s goal to capture a full 25pc share of the low-carbon hydrogen market—a hugely ambitious target given that, in the Mideast Gulf alone, Saudi Arabia and Oman are also limbering up to become major players.

The initial focus will be on blue hydrogen and be fronted by Adnoc, which produces all of Abu Dhabi’s natural gas. In mid-November, a year of cooperation pacts and test trades with the firm’s longstanding Japanese state and corporate partners bore fruit in an agreement for Japan’s Mitsui to take an unspecified equity stake in the Emirati firm’s first blue ammonia project, planned at the fledgling Ta’ziz chemicals cluster at Ruwais. South Korea’s GS Energy agreed to do likewise, with both committing to offtake some of the 1mn t/yr output.

Oil and gas plan

Adnoc’s forays into cleaner forms of energy co-exist with an unapologetic determination to expand its oil and gas production.

A five-year $127bn capital spending and business plan unveiled last month reaffirmed its intent to expand crude production by 25pc, to 5mn bl/d, by 2030 and incorporated a new goal of doubling LNG exports to 12mn t/yr by the same date, the latter mainly via the energy-intensive process of tapping ultra-sour reserves off the northwest coast. To reconcile that with the government’s commitment to reach carbon neutrality by 2050, a wide-ranging effort to reduce the company’s carbon-intensity gathered pace in the fourth quarter.

Adnoc’s forays into cleaner forms of energy co-exist with an unapologetic determination to expand its oil and gas production

Adnoc signed a long-term agreement in late October with state-owned utility Emirates Water and Electricity Company to offtake renewable and nuclear energy to power its operations from January 2022. That was followed in December by a “joint cooperation initiative” with the US’ GE to reduce emissions from the natural gas-fired turbines used in the company’s downstream and industrial operations, chiefly those at the Ruwais refinery and petrochemicals complex, by using hydrogen and hydrogen-blended fuels as feedstock or by deploying carbon capture.

The Emirati firm also put some flesh on the bones of its plans for a fivefold increase in its carbon capture and storage (CCS) capacity to 5mn t/yr. Adnoc signed a “strategic framework agreement” in November with TotalEnergies—which boasts equity production of 286,000bl/d oe in the emirate through stakes in some of its largest oilfields—to explore collaboration on emissions reduction and CCS. Highlighting the uncomfortable marriage between conflicting goals of decarbonisation and increased oil production, the long-time upstream partners pledged to study the use of the sequestered carbon for enhanced oil recovery.

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Author: Clare Dunkley