The UK/UAE Hydrogen Power Abu Dhabi (HPAD) joint venture will not tender a construction contract for a $2bn hydrogen power plant until the third quarter of 2010, as the project continues to face delays related to the failure to complete offtake agreements for the plant.

HPAD, a 60:40 joint venture of the UK’s BP and Abu Dhabi Future Energy Company (Masdar), has been ready to tender the engineering, procurement and construction (EPC) contract since January.

However, it has not been able to issue the tender because of ongoing negotiations over offtake agreements for the carbon dioxide and power produced at the plant with state energy giant Abu Dhabi National Oil Company (Adnoc) and state utility Abu Dhabi Water and Electricity Authority (Adwea).

In March Masdar had told contractors that it would issue tenders in the second quarter of the year. Sources close to the development say the invitation to bid on the deal will not be sent out until late in the second quarter, and that this timeline could be subject to change if negotiations do not progress.

The power plant will be located at Shuweihat, 250 kilometres west of Abu Dhabi, and 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. Similarly, an agreement is yet to be reached over the terms of the electricity deal with Adwea.