With the continual global rise in carbon dioxide (“CO2”) emissions, options exploring the reduction and removal of CO2 are being explored by the global community. Carbon capture usage and storage (“CCUS”) technologies have become even more topical as COP28 approaches and attention focuses on global and national net zero CO2 targets.
Carbon capture and storage (“CCS”) involves capturing, compressing and transporting CO2 emissions to a storage site where it is injected underground for permanent storage, whilst CCUS technology additionally offers the opportunity to use the captured CO2 rather than releasing it into the atmosphere.
For the Middle East, CCUS use is a matter of some debate. On the one hand, CCUS offers a route to net zero, alongside energy security. This is through the oil and gas sector bridging the current shortfall of renewable energy production. On the other hand, it has been argued that CCUS delays a switch away from fossil fuels and investment into renewable energies because companies are permitted to sustain/ increase their oil and gas production.
For example, injection of the captured CO2 into deep underground formations to facilitate the enhanced extraction of oil (“Enhanced Oil Recovery”) is a criticism of CCUS’ use in the Middle East. Whilst offering a financial incentive for investment into CCUS technology in a region that is traditionally reliant on oil and gas production, this method does not in itself reduce fossil fuel emissions. In June 2023, UN Secretary-General António Guterres illustrated this concern, and stated that the oil and gas industry is using CCUS “proposals to become more efficient planet wreckers” and justify the expansion of their fossil fuel production.[1]
CCUS in the Middle East
CCS/ CCUS Projects
Globally, there are approximately 47 CCUS projects in commercial operation.[2] In the Middle East, the three key operational carbon capture projects are in the Kingdom of Saudi Arabia (“KSA”), Qatar and the United Arab Emirates (“UAE”). This makes up 10% of the 40 million tons per annum (“Mt p.a.”) of CO2 captured globally.[3] Comparatively, the Middle East lags behind the United States, which is the global leader in CCUS and accounts for 60% of global CO2 capture.[4]
The signing of strategic partnerships, increase in regional commitments to net zero (e.g. UAE Net Zero 2050), and ‘blue’ hydrogen[5] development, have each helped propel CCS/CCUS projects in the Middle East. Whilst capital costs for the technologies remain high, advancements are being made partly due to economic factors and national/regional aims to diversify Middle Eastern economies. The Middle East is also seeking to be in a leading position when looking at investing ‘in the future’, i.e. the economic opportunities with respect to climate action.
As such, CCS is referenced in several nationally determined contributions (“NDCs”)[6] including those of Bahrain, KSA, Qatar and the UAE. For example, in July 2023 the UAE approved an updated version of its second NDC, specifically outlining the development of financial and legal policies to support CCS (discussed further below).
State-owned oil companies and CCS/ CCUS
In October 2023, ADNOC announced that it had doubled its 2030 carbon capture target from 5 to 10 Mt p.a. of CO2. ADNOC intends to use CCUS to help achieve net zero from its own operations by 2045 and counterbalance its expanding oil and gas production[7].
KSA follows a similar approach. KSA’s national Vision 2030 strategy sets out the concept of a Circular Carbon Economy (“CCE”), with a closed loop system of the ‘4 Rs’: (1) reduce (2) reuse (3) recycle and (4) remove. CCUS is key for the ‘remove’ aspect of the CCE. Saudi Aramco has been capturing CO2, injecting it into reservoirs, and conducting Enhanced Oil Recovery feasibility studies (see the Uthmaniyah CO2-EOR Demonstration Project below for more detail).
Saudi Aramco is also looking to develop Mobile Carbon Capture and Storage technologies for cars and trucks with the aim to capture and store up to 40% of the CO2 in tailpipe exhaust emissions. This is then unloaded at fuel stations for sequestration (or recycling).
Existing notable carbon capture projects in the Middle East
Project name | Country | Summary |
Uthmaniyah CO2-EOR Demonstration Project | KSA | The ‘Uthmaniyah Project’ for short, spearheaded by Saudi Aramco, has been in operation since 2015. It has a capacity to capture 0.8Mt of CO2, from the Hawiyah Natural Gas Liquids Recovery Plant, which is later injected into the Uthmaniyah oil reservoir (within the Ghawar oil field) to recover more oil. |
Al Reyadah CO2-EOR | UAE | The Al Reyadah project has been operational since 2016. The project (a joint-venture between ADNOC and the Abu Dhabi Future Energy Company (“Masdar”)) captures 0.8 Mt p.a. of CO2 from the Emirates Steel Plant. The CO2 from the steel plant is injected into oil fields in Abu Dhabi for Enhanced Oil Recovery purposes. This was the first in the world to capture CO2 from steel. |
Ras Laffan CCS Project | Qatar | The Ras Laffan project has been in operation since 2019. The project has an announced capacity of capturing 2.1Mt of CO2 from the Ras Laffan Liquefied Natural Gas facility. In contrast to Saudi Aramco and ADNOC which look to use CO2 for Enhanced Oil Recovery purposes, the state-owned QatarEnergy injects this gas into a dedicated geological storage site. |
Further carbon capture developments in the Middle East
Country | Summary |
KSA | Saudi Aramco is also working with SLB and Linde to build one of the world’s largest CCUS hubs in the Jubail industrial Zone, which intends to capture up to 9 Mt p.a. of CO2 starting in 2027. |
UAE | In September 2023, ADNOC approved the Habshan CCUS project which will have the capacity to store 1.5 Mt p.a. of CO2. ADNOC is also working with Eni to explore CCUS opportunities concerning innovative geo-mechanical and geo-chemical CCUS programmes, in addition to developing the world’s first fully sequestered CO2 injunction well in a carbonate saline aquifer. In July 2023 the Sharjah National Oil Corporation signed a deal with Sumitomo Corporation for work on a CCS project. In 2021, ADNOC signed an agreement with TotalEnergies to explore CCS. |
Oman | In May 2022, Shell and Petroleum Development Oman (PDO) signed an agreement to jointly collaborate on CCUS for blue hydrogen production. |
The future of CCUS in the Middle East
With the ongoing reliance on heavily CO2 emitting sectors in the region, the use of CCUS technology could become a key method for reaching net zero. This is particularly if there is sufficient application and utilisation of CO2 beyond Enhanced Oil Recovery. Whilst increasing the penetration of renewables is needed, using CCUS recognises the existing energy mix in the Middle East and offers a route to move towards net zero.
Whilst it remains to be seen as to the precise balance in the region between CO2 removal using CCUS, and an increasing use of alternative energy sources, what is more certain is that CCUS alongside renewable and nuclear energy generation will be vital for reaching net zero and decarbonisation targets across the Middle East.
Critically, the cost of adding CCUS must make commercial sense. The high capital cost and cost of implementation of CCS may restrict the willingness of external investment without sufficient certainty of future economic benefits to the investors. As part of this, the general lack of a legal regulatory framework for Middle East CCS projects needs to be addressed too. Contractual mechanisms such as those being explored in the UAE are welcome new. The UAE’s CCS policy package includes plans for the introduction of Carbon Contracts for Difference (“Carbon CfDs”) which will offer long-term revenue stability (akin to similar contracts seen in the UK and globally for renewables).
To further encourage the roll-out of a CCS infrastructure network, the regulation of transport and storage is being designed. This involves the remuneration of CCS network operators and the ability to transfer liability from storage operators to the government on fulfilment of certain conditions.
In addition, as the Middle East develops hydrogen strategies and clearer carbon neutral intentions, the use of CCUS for the production of blue hydrogen could pave the way to move away from higher carbon-emitting hydrogen ‘colours’ (please see here for further information on hydrogen in the Middle East).
The growth of these technologies must be supported by investment into alternative energy sources. If not, criticisms of nations and oil and gas (particularly state-run) companies’ failure to directly tackle the adverse impacts of climate change will remain. A balance between emitting less or removing more will be key to strike in the region.
Article co-authored by Abbas Yusuf , Trainee Solicitor at CMS.
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