Taqa aluminium move pays off

Abu Dhabi National Energy Company said third quarter profit nearly more than doubled as higher oil prices and increased output pushed up revenues.

The Taweelah power station is one of the facilities that Taqa operates in the UAE.

Abu Dhabi National Energy Company (Taqa) says its move into aluminium has helped boost revenues for the third quarter.

The company said its share of income from the 40 per cent acquisition of Oman's Sohar aluminium plant in June and damages it received because of delays to the Fujairah 2 water and power plant contributed to profits for the quarter.

Higher oil prices and increased output also pushed Taqa's third-quarter profit to more than double, the company announced yesterday.

Taqa, which is majority-owned by the Abu Dhabi Government, earned Dh218 million (US$59.3m) in net profit for the quarter, up from Dh90m for the same period last year.

The company received damages totalling Dh311m after a delay in the completion of the Fujairah 2 plant.

Abu Dhabi Water and Electricity Authority transferred 90 per cent of its interest in Fujairah 2 to Taqa in the third quarter, giving the company a 54 per cent interest. But the delays ate into revenues. Fujairah 2 is now expected to be complete by the end of the year.

The US Federal Reserve's decision to pump $600 billion into the US economy has pushed up the price of dollar-denominated commodities such as oil, providing more revenues for Taqa.

The price of oil hit $88 a barrel yesterday after reaching a two-year high last week.

Taqa's oil and gas revenues contributed Dh1.63bn to total revenues, while revenue from power and water was stable at Dh1.6bn.

Power generation in the quarter increased by 2 per cent compared with the same quarter last year.

Taqa is on track to achieve its targeted production of 138,000 barrels of oil equivalent per day (boepd) by the end of the year, Carl Sheldon, the general manager of the company, said yesterday.

Output stood at 136,800 boepd at the end of the third quarter.

"Over the course of the last three months, in response to the more positive commodity pricing environment and as a result of our asset optimisation work and acquisitions, we have increased production in our upstream assets," Mr Sheldon said.

The company, which owns stakes in oil and gas generation assets across North America, the Middle East, India and the North Sea, is spending $1.4bn to develop assets.

Alongside its stake in Sohar Aluminium, Taqa won three new licences in the North Sea and the Netherlands.

"These licences are for areas that have never been looked at before," Mr Sheldon said. "They are untouched so we are hoping we will find something there."

In September, the company agreed to buy Total's 81 per cent stake in two mature oil blocks in the North Sea.

It also raised its stake in the $1.4bn Bergermeer gas storage project in the Netherlands to 60 per cent from 24 per cent.

Mr Sheldon said the company had accepted the terms on $3bn of credit lines that would be used to refinance a $3.15bn revolving credit facility due to mature next year.