Negotiations over offtake agreements are stalling the development of a $2.2bn hydrogen power plant in Abu Dhabi, which is set to be the world’s largest.
The Hydrogen Power Abu Dhabi (HPAD) project is being developed by a 60:40 joint venture of Abu Dhabi Future Energy Company (Masdar) and the UK’s BP.
Senior executives at companies behind the scheme say they are ready to start the bidding process for the deal to build the plant at Shuwaihat, 250 kilometres west of Abu Dhabi city.
However, ongoing talks with Abu Dhabi National Oil Company (Adnoc) and Abu Dhabi Water and Energy Authority (Adwea) are delaying the tender.
The power plant will break down natural gas supplied by Adnoc into hydrogen and carbon dioxide.
The hydrogen will be used to generate 400MW of power, which Masdar wants to sell to Adwea. The company also plans to sell the carbon dioxide back to Adnoc for injection into its oilfields, as part of a wider carbon capture and storage (CCS) scheme.
An agreement has been reached over the volume and cost of the gas to be supplied by Adnoc but no deals have been made over how much carbon dioxide Adnoc will take from Masdar and how much it will pay for it, according to executives working on the scheme. Similarly, an agreement is yet to be reached over the terms of the electricity deal with Adwea.
“We are absolutely ready to go with construction,” says Paul Lyndon Bryant, director of the HPAD project at BP. “We are just finalising terms with the offtakers, which may take one or two weeks, or one or two months.”
The complexity of the CCS scheme is making it difficult to work out the exact terms of the deals, adds Frank Wouter, head of power at Masdar.
Masdar wants to capture 5 million tonnes a year of carbon dioxide at four sites across the emirate, including the hydrogen power plant, he explains.
“It is all down to the complexity of the development,” says Wouter. “It is not a standalone project. There is the question of the other CCS projects and the pipeline [linking them]. We need to reach an agreement on the pricing, volume and timing.”
The partners expect to tender the construction deal before the end of March (MEED 18:1:10).