Aramco technology chief expects clean hydrogen market to follow LNG model
Saudi Aramco’s Chief Technology Officer Ahmad al-Khowaiter says that clean hydrogen production is unlikely to reach scale until at least 2030
Saudi Aramco’s Chief Technology Officer Ahmad al-Khowaiter says that he expects a blue hydrogen market will likely follow the operating model of the liquefied natural gas (LNG) sector.
Speaking in an interview broadcast by Bloomberg TV on 28 June, Al-Khowaiter said that the lack of ready off-take market and the standard lag between planning and capital investment in major energy projects means that he does not expect blue hydrogen production to start at scale until at least 2030.
“We will see those investments when the demand appears for blue ammonia and for low carbon hydrogen,” said Al-Khowaiter. “I would say the scale up isn’t going to happen before 2030.”
“It works very similar to the LNG industry. The LNG industry establishes an off-take agreement first and then makes capital investments. So from the time you get clear off-take scale commercial agreements you are talking about a five-to-six-year capital cycle to invest in production and conversion requirements. That’s why I said we don’t see this happening at scale until 2030.”
Establishing a clean hydrogen sector, producing both green and blue hydrogen, has emerged as a key priority for Saudi Arabia’s energy and economic diversification objectives set out in its Vision 2030 strategy.
In March 2021, Saudi Arabia’s energy minister Prince Abdul Aziz bin Salman and Germany’s minister for economics and energy Peter Altmaier signed an agreement to cooperate in the emerging push for green hydrogen.
“The potential of hydrogen has always been there, but now it is entering the mainstream of strategic energy thinking. As countries work jointly to address climate change, we affirm our commitment to lead the response in managing emissions, while continuing our socio-economic development. Our commitment to tackle climate change is firm, a commitment I know Germany shares,” said Prince Abdul Aziz following the signing.
“It is also a compelling investment proposition, with huge investment opportunities in hydrogen over the coming decades.”
In 2020, US-based Air Products and the local Acwa Power signed a to develop an MoU to develop a $5bn hydrogen-based ammonia plant in Saudi Arabia.
The $5bn hydrogen-based plant will be located at the planned $500bn Neom development on the Red Sea Coast of the kingdom, one of the kingdom’s Public Investment Fund (PIF’s) key megaprojects planned to diversify the country’s economy away from a dependence on oil.
The project will be powered by more than 4GW of renewable energy, and will be able to produce 1.2 million tonnes per year of ammonia. The plant will produce 650 tonnes of hydrogen daily, Air Products revealed in a statement released on 7July.
Air Products will be the offtaker for the produced green ammonia, and will invest a further $2bn in distribution. Production from the facility is due to begin in 2025.
To find out more about the potential for clean hydrogen in the Middle East and an overview of the main technologies and schemes underway for green and blue hydrogen to date, listen to the recent clean hydrogen edition of Energy & Utilities Market Talk podcast with special guest Frank Wouters, vice president of business development, clean hydrogen, Worley.
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