INTERVIEW: ADNOC to reduce carbon intensity by 2030 despite oil capacity boost

Abu Dhabi National Oil Co. is still on track to reduce its upstream carbon intensity level by 25% by 2030 from 2019 levels even as it forges ahead with plans to boost its oil production capacity in five years, a senior executive told S&P Global Commodity Insights.

ADNOC, which pumps most of the UAE's oil, is spending $150 billion over 2023-2027 for growth projects including the oil capacity ramp-up to 5 million b/d by 2027 from about 4.5 million b/d now, as well as boosting its investments in gas production.

"I think with the initiatives in place, we will achieve that target of 25% decrease in carbon intensity," Musabbeh al-Kaabi, executive director of low carbon solutions and international growth, said in an Aug. 15 interview.

"We have taken into account our increase in [oil production] capacity."

He did not disclose the 2019 level, but in 2022 ADNOC's upstream GHG intensity was about 7 kgCO2e/boe. The 2022 figure excludes onshore gas processing activities.

The UAE, OPEC's third-biggest oil producer, is burnishing its green credentials ahead of hosting the UN Climate Change Conference, or COP28, in November in Dubai.

Fossil fuels phaseout

ADNOC CEO Sultan al-Jaber is president of COP28 as well as the UAE's special climate envoy. Jaber recently called on governments to fast-track their climate goals ahead of the key event, and admitted that the phaseout of fossils fuels was inevitable and essential.

The UAE, the first country in the Gulf region to pledge to hit net zero emissions by 2050, aims to cut its greenhouse gas emissions by 19% from 2019 levels by the end of the decade as it boosts renewable power's contribution to the energy mix and becomes a top producer of low-carbon hydrogen.

The new target constitutes a 40% reduction compared to the business-as-usual scenario for 2030.

ADNOC has brought forward its net zero Scope 1 and Scope 2 emissions target to 2045 from 2050.

In 2022, ADNOC's total Scope 1 and Scope 2 emissions from its upstream operations were about 24 million mtCO2e. The company abated over 5 million mt of GHG emissions in the year, including about 4 million mt from utilizing clean energy for onshore operations and about 1 million mt from energy efficiency and flaring reduction, it said.

ADNOC has not disclosed comparative figures for 2021 emissions, or the target for lowering emissions by 2030.

To achieve its net-zero targets, ADNOC is accelerating the execution of low-carbon projects by spending $15 billion by 2027 instead of the previous target of 2030, as part of the group's 2023-2027 capex of $150 billion, Kaabi said.

'Achievable' target

"The possibility for this number [$15 billion] to go up is very high," said Kaabi. "We believe 2045 is achievable, based on the investments we see on the horizon and based on the technology and based on policies that we see around us, not only in this country but globally."

One big chunk of the $15 billion will be spent on increasing ADNOC's carbon capture, utilization and storage (CCUS) to 5 million mt/year by 2030 from 800,000 mt/year now. Another major project is a $3.8 billion plan to link the company's offshore operations to a grid operated by nuclear and renewable energy.

"The [CCUS] target remains around a minimum of 5 million mt/year, but I see a possibility that we will increase that target as we speak, but we need to firm up a few parameters," said Kaabi.

ADNOC has also committed to have zero methane emissions from its operated oil and gas assets by 2030 compared with about 0.07% methane intensity in 2022.

ADNOC expects natural gas to play a vital role in helping to reduce emissions in the UAE and globally, he said.

"We believe that gas will play a significant role in the energy transition and if we want to be practical about achieving these net zero targets by 2050 or earlier, I think we should push more natural gas into the system," said Kaabi. "In a net result, it is good for the climate agenda to see natural gas replacing coal in Asia, in Europe."

ADNOC Gas, a unit of the parent company, plans to spend $14 billion over 2023-2027 on growth projects and another $2 billion on LNG.

Carbon neutral gas

ADNOC currently has the capacity to produce 6 million mt/year of LNG and is building two 4.8 million mt/year trains in Abu Dhabi to cater to rising global demand for the fuel. ADNOC is also looking for global gas and LNG assets after acquiring a stake in an Azeri field and offering to buy with BP a 50% stake in Israel's NewMed Energy, the largest shareholder in the country's offshore Leviathan gas field.

"I think from the climate agenda, it will be a quick win and a more practical way to achieve these [net-zero] targets rather than bombard the system with renewables, because renewables have their own set of challenges with intermittent power," said Kaabi.

In the future, power turbines could be equipped with carbon capture capabilities to help lower their emissions, allowing consumers to further reduce their carbon footprint, he added.

"I see a future where I can equip that baseload with carbon capture to become carbon neutral," said Kaabi.

"Natural gas, with the right technologies, could achieve the climate targets under the [net zero] scenario of 2050 or earlier."