Abu Dhabi’s launch onto the global hydrogen scene in late May mirrored the contrasting faces of its energy sector—on one side a regional clean energy pioneer and, on the other, a carbon-belching petrostate.

First, state-owned Adnoc announced plans to develop a world-scale blue ammonia production plant at the company’s downstream and industrial hub at Ruwais, in the west. A day later, fellow parastatal Abu Dhabi Ports (ADP) unveiled the UAE’s first commercial-scale green ammonia scheme at Khalifa Industrial Zone Abu Dhabi (KIZAD), in the east.

There is an imperative to secure first-mover advantage as other gas-rich regional states well-positioned on global trade routes likewise rush to join the nascent market

The emirate has been openly teeing-up the twin moves for six months. In November, no lesser figure than Crown Prince and de facto ruler Sheikh Mohamed bin Zayed al-Nahyan was declared to have tasked Adnoc with exploring opportunities in hydrogen and carrier fuels “to position the UAE as a hydrogen leader”, and two months later the formation was announced of a tripartite alliance with fellow parastatals ADQ (a holding company including ADP) and Mubadala (an investment vehicle that counts local and regional clean energy titan Masdar as a subsidiary) to co-operate in developing the sector. Meanwhile, potential importers were lined up from among the traditional energy-poor Asian bedrocks of demand for the emirate’s crude oil—with Japan, South Korea and India all pledging hydrogen collaboration.

Adnoc’s focus (and, in the near term, that of its government owner) is inevitably on the blue form of the fuel—given the company’s plentiful reserves of natural gas and expertise in carbon sequestration, of which it has been a regional trailblazer. Plans were announced in February to increase carbon capture use and storage capacity over sixfold from 800,000t/yr (which currently entails capture of emissions from steel production for use mainly in oilfield injection) to 5mn t/yr by 2030.

There is an imperative to secure first-mover advantage as other gas-rich regional states well-positioned on global trade routes (notably Egypt, Oman and Saudi Arabia) likewise rush to join the nascent market. A consensus is also emerging that blue hydrogen’s dominance will wane over the course of this decade in favour of its cleaner rival as solar and wind power costs fall, electrolysers are scaled up and carbon-pricing regimes evolve.

A study published in March by consultancy Rystad Energy sees green hydrogen reaching price parity with blue by 2030 and progressively undercutting it from then on. Market analyst Fitch Solutions released a report last month projecting the zero-carbon option would account for 10pc of the market by the end of the decade, up from less than 1pc today.

The emirate’s first blue ammonia venture will form part of a proposed chemicals cluster at Ruwais, dubbed TA’ZIZ and announced in November by Adnoc and ADQ an apparent attempt to galvanise slow-moving plans unveiled three years ago to develop a $45bn derivatives and conversion hub at the site, which is home to an expanding 4.5mn t/yr petrochemicals complex.

The plant will produce 1mn t/yr of blue ammonia from hydrogen sourced from the oil company’s existing operations there—which also include an 837,000bl/d refinery. The UK’s Wood Group has been selected to carry out feasibility studies, with FID anticipated next year in time for completion by mid-decade.

Green ammonia

The green ammonia plans announced a day later were vaguer and more modest in scope—a fact highlighted by Oman’s launch a week before of a project nearly 50 times the size. Helios Industry, a privately owned local special projects vehicle, intends to install an 800MW solar power plant at KIZAD, which will be used to produce 40,000t/yr of hydrogen and 200,000t/yr of ammonia—at a cost of around $1bn. Nothing was revealed in terms of timetable or indication of what stage the project had reached in terms of ultimate shareholdings and contracting strategy, but Masdar is likely to be involved in some capacity.

1mn t/yr – Expected blue ammonia production

Blessed with year-round sunshine and being an early regional adopter of privately procured power generation, the UAE has become a global leader in driving down solar costs, repeatedly setting new records on site capacity and price.

However, geographical size puts a natural limit on ambition—a quality not normally lacking in the federation. Assuming the Omani scheme covers around the same area as the same developer’s similarly sized Australian project, it would cover nearly 10pc of Abu Dhabi’s land mass and entirely swamp Dubai. Saudi Arabia, which plans a $5bn green hydrogen plant in its remote northwest, enjoys the same territorial boon. The Emirati government’s urgency to extract maximise income from blue hydrogen while its global acceptability and competitiveness last is understandable.

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Author: Clare Dunkley