Monday, August 2, 2021

UAE seeks investors to build hydrogen export facilities

Abu Dhabi is seeking investors to help build hydrogen export facilities as Middle East oil producers step up plans to sell what is seen as a crucial fuel in the transition to cleaner energy.

Abu Dhabi National Oil Co., which pumps nearly all of the oil and natural gas in the UAE, is in talks with energy companies to buy stakes in hydrogen projects, according to people familiar with the matter. It also aims to sign long-term supply contracts before going ahead with investments, they said.

The hydrogen market is small today, but it could be worth as much as $ 700 billion annually by 2050, according to BloombergNEF.

Projects to export the fuel, which only emits water vapor when burned, are likely to cost billions of dollars. But amid a global push to cut greenhouse gas emissions, Persian Gulf nations like the United Arab Emirates and Saudi Arabia are looking to hydrogen to reduce their dependence on oil.

Offers to Japan, Korea

Hydrogen may become an important source of energy in the next 20 years, said Sultan Al Jaber, head of Adnoc and climate envoy for the United Arab Emirates. The company has signed agreements to explore sales of the fuel with the government of Japan and GS Energy of Korea.

State oil companies in the Gulf want to turn their liquid fuel export expertise into shipping hydrogen or ammonia to customers around the world for electricity, transportation and industrial use.

Saudi Aramco aims to have a “large share” of the market that it sees emerging from 2030 onwards.

Most of what Adnoc exports is likely blue hydrogen, created by converting natural gas and capturing the by-product of carbon dioxide. Hydrogen can be converted to ammonia for easier transport.

On Wednesday, Adnoc said it would study business opportunities for ammonia projects in the United Arab Emirates with Japan’s Inpex Corp. and Jera Co., and with the Asian country’s state energy company.

Ammonia plant

Adnoc, which already produces hydrogen for its refineries, will boost production by expanding an oil processing plant and Borouge petrochemical facility in the Ruwais industrial center, according to the people. The additional hydrogen will be used for a planned ammonia facility with Fertiglobe, a fertilizer company.

In a sign of growing interest from international companies in using the region as a base for hydrogen, Italian producer Eni SpA said it will study the commercial viability of such projects in Egypt. Eni said he will study the use of renewable energy or carbon capture technology to avoid or eliminate carbon emissions.

Abu Dhabi also wants to develop green hydrogen, which is produced using renewable energy, such as solar energy, in a process that does not emit carbon. Blue hydrogen is cheaper and is expected to remain so for many years.

The UAE is considering setting a net zero emissions target, Bloomberg reported last month, something that no OPEC member has done yet. It also seeks to increase its renewable energy capacity.

Still, along with green initiatives, the country is spending billions of dollars to allow it to pump more crude. Those investments have sparked tensions with Saudi Arabia and the Organization of the Petroleum Exporting Countries, with the UAE arguing that its current share of oil production is too low.

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