Cepsa is leveraging its relationship with Mubadala Investments and is in talks with Abu Dhabi National Oil Company and Masdar for potential co-investments and partnerships as it pursues its low-carbon energy strategy in Europe, its chief executive said. The Spanish oil and gas company, which is majority-owned by Abu Dhabi strategic investment fund Mubadala, is in talks with state-owned energy producer Adnoc over a green hydrogen partnership, Maarten Wetselaar said in an interview.

Potential collaborations could take the form of joint investments to develop the entire hydrogen value chain from the Middle East to Europe and North Africa. Another option is for Cepsa to focus on building demand and infrastructure in Spain and the rest of Europe, as Adnoc remains focused on hydrogen production, he said. "We are actually discussing this with Adnoc at the moment," Mr Wetselaar said. "The biggest added value we can have is to provide market access. We have customers in Spain and can develop customers in other parts of Europe."

Either approach could work, he said, but it's a bit early to say how its potential partnership with Adnoc will take shape, Cepsa's unique contribution is more in Spain and continental Europe, which I think is the starting point. Mr Wetselaar said Cepsa also counts The Carlyle Group as its shareholder, bringing its expertise and knowledge to Abu Dhabi to work with Adnoc.

Hydrogen, which can be produced from renewable energy and natural gas, is expected to play a key role in the coming years as economies and industries transition to a low-carbon world to mitigate the effects of climate change. Green hydrogen is produced from renewable sources, while natural gas produces blue and grey hydrogen. About $600 billion will need to be invested in low-carbon hydrogen by 2050 to meet growing demand for greener fuels, Wood Mackenzie said. The global hydrogen industry is expected to reach $183 billion by 2023, up from $129 billion in 2017, Fitch Solutions said. French investment bank Natixis estimates that hydrogen investment will exceed $300 billion by 2030.

Global demand for low-carbon hydrogen will surge from less than 1 million tonnes today to 223 million tonnes by 2050, according to estimates by Wood Mackenzie. Mr Wetselaar is bullish on Spain as a major hydrogen hub in Europe, saying the country is well-positioned to be a port of entry for hydrogen imports from North Africa and the Middle East. “Certainly, our relationship with Masdar, Adnoc and Mubadala presents a very good opportunity for us to be a company that accepts hydrogen streams from Abu Dhabi,” he said.

Mr Wetselaar, who joined Cepsa from Shell in early 2022, plans to make Cepsa a global leader in green hydrogen and low carbon fuels. Cepsa aims to invest between 7 billion and 8 billion euros ($8.9 billion) over the next decade, with more than 60 percent of that going to sustainable businesses starting next year. The company plans to achieve net-zero emissions by 2050 and aims to lead Spain and Portugal in green hydrogen production by 2030, with a capacity equivalent to 2 gigawatts.

The development of a green hydrogen sector is also at the heart of the UAE's energy diversification strategy, as it aims to capture about 25 percent of the global hydrogen market, UAE Energy Minister Suhail Al Mazrouei said earlier in 2022. Mubadala described hydrogen as one of the most promising areas for investing in renewable energy. In 2021, Mubadala, Adnoc and Abu Dhabi holding company ADQ joined forces to form the Abu Dhabi Hydrogen Alliance, with a focus on building the UAE as a global hub for low-carbon green and blue hydrogen energy.

In 2021, Adnoc and Taqa joined Mubadala as shareholders in Masdar, a move that will boost its renewable power generation capacity to more than 50 GW by 2030 and help create a global champion in renewable energy and green hydrogen. Ahmed Yahia Al Idrissi, Chairman and Chief Executive Officer of Direct Investments, Cepsa, said: "Investing and partnering in the energy transition has been a priority for Mubadala since 2006, in line with our responsible global commitment to all sectors that drive global progress. investment commitments.”

The company's comprehensive transformation and massive investment over the next decade will make it a European leader in green hydrogen, biofuels and electric vehicles. It will also help it advance its clean energy goals and meet customer expectations, Mr. AlIdrissi said. As part of its green strategy, Cepsa is looking to convert its traditional refinery into a renewable energy park. The company plans to develop a portfolio of solar and wind projects mainly for self-consumption with a capacity of 7GW, of which 1.5GW is already grid-connected.

Cepsa has approached several companies, including Masdar, to explore co-investment options to develop its renewable energy portfolio. "Masdar is definitely a potential partner for some or all of the park. We are ultimately only interested in getting green electronics as cheaply as possible," Mr Wetselaar said.

In January 2020, Masdar and Cepsa formed a 50:50 joint venture with Cepsa Masdar Renovables focused on developing wind and solar PV projects in Spain and Portugal.

Cepsa could choose to invest individually and then sell its renewable energy portfolio, but it's more likely to form a partnership. “If we end up with 100% of 7GW of solar and wind by the end of the century, in my current view of the industry, we want to be a minority shareholder in these farms,” he said.

The company announced in March that the green push would translate into a larger contribution of sustainable businesses to Cepsa's top line, rising from 14% in 2022 to more than half of EBITDA in 2030. Mr Wetselaar said it could exceed its investment target of 8 billion euros, or allocate more than 60% of its funding to sustainable businesses, depending on how quickly the market develops and the regulatory framework matures in the coming years. "If all goes well, we will reach 8 billion euros or more," he said. Keywords: engineering construction, engineering news

The company is currently designing major hydrogen investments and is working with the government to create an environment conducive to making final investment decisions, but he did not elaborate on the potential size of the investment. Mr Wetselaar said: “We don’t disclose specific numbers, but you can imagine this will be one of three projects in the sustainable part of our investment.” Cepsa plans to start construction of the hydrogen production center in 2023, but when the project is completed will depend on Global supply chain situation.Editor/XingWentao