The UAE’s landmark commitment this month to achieve carbon neutrality by 2050—the first country to do so from a region that pumps more than a fifth of the world’s crude—caps a period of rapid realignment for the main Gulf Cooperation Council (GCC) hydrocarbons producers.

Hydrogen projects worth more than $40bn have been announced in Oman, Saudi Arabia and the UAE over the past 18 months. Some are more credible and concrete than others: stakeholders in a proposed 25GW renewables and green hydrogen hub in Oman announced by Hong Kong-based Intercontinental Energy in May do not envisage even taking a decision on going ahead for another five years.

The region enjoys inherent competitive strengths in terms of available gas and sunshine, existing energy infrastructure and proximity to major Asian growth markets

But other schemes have edged towards execution over the past few months, driven by host governments' increasingly acute awareness—piqued by last year's oil price collapse—of the need to diversify away from oil, the recognised merits of first-mover advantage and the global buzz around the sector.

The region enjoys inherent competitive strengths in terms of available gas and sunshine, existing energy infrastructure and proximity to major Asian growth markets. Crucially, its main oil and gas producers have decades-old international energy relationships to build on—facilitating the early producer/consumer collaboration necessary to justify the capital costs of scaling up operations and ultimately reducing the unit price.

Regional leader

Not surprisingly, given a well-established clean energy sideline and early experiments with carbon capture and storage (CCS), Abu Dhabi is shaping up to be the regional leader. The emirate not only has a trio of multibillion-dollar blue and green hydrogen projects mapped out—two backed by corporate offshoots of the wealthy government—but has also laid the groundwork for a potentially landmark partnership with Japan to develop the sector for mutual advantage. Fertiglobe, a joint venture (JV) between state-owned Adnoc and Dutch chemicals company OCI, shipped its first blue ammonia cargoes—derived from adding CCS to existing fertiliser facilities at Ruwais—to Japanese buyers Idemitsu, Inpex and Itochu in August.

The same local parties envisage taking FID by mid-2022 on a greenfield 1mn t/yr blue ammonia plant at the western downstream hub, with the UK’s Wood Group selected for initial design studies in June and commissioning pencilled-in for 2025.

Abu Dhabi is shaping up to be the regional leader

Adnoc’s great regional rival, Saudi Aramco, has been slower off the blocks. The Saudi state oil behemoth shipped the Mid-East Gulf’s first blue ammonia cargo—again a test shipment to Japan—in September last year and has likewise made a move into CCS at the supergiant Ghawar oilfield. However, the firm has yet to commit to a dedicated blue hydrogen production facility, with chief technology officer Ahmad al-Khowaiter indicating in in June the company remained undecided on the manner and timing of its entry into the industry, saying blue ammonia would not be changing hands in large volumes before the end of the decade.

Saudi Arabia is relatively poorly endowed with gas and has so far used the excess beyond domestic power generation requirements to expand the country’s bedrock petrochemicals industry. At the other end of the gas spectrum, Doha is likewise keeping a watching brief on utilising some of its 870tn ft³ for hydrogen extraction—preoccupied instead with decarbonising its LNG exports, which buyers can convert to hydrogen should they choose to.

According to the sponsors’ timelines, the Adnoc-led blue ammonia scheme could be beaten to first production in the emirate by one of two green hydrogen projects announced in quick succession over the summer at the eastern Kizad industrial zone. The first of these is Helios, a privately owned local special purpose vehicle which intends for the 40,000t/yr first phase of a 200,000t/yr green ammonia plant to come onstream in the second quarter of 2024, with the remainder commissioned in 2026. Germany’s Thyssenkrupp was selected in August to carry out technical studies. Details on the second plant, planned by parastatal duo Taqa and Abu Dhabi Ports, have been more vague, but it is to be based on a 2GW electrolyser.

Cost competitiveness

However, neither has yet revealed its solution to the challenge facing green hydrogen developers of ensuring buyers for a product not expected to become competitive with its more carbon-intensive forms until early next decade. Riyadh, through state-affiliated Acwa Power, surmounted the hurdle by persuading US industrial gases company Air Products to sign up to co-invest in a planned $5bn, 1.2mn t/yr green ammonia plant at the Neom new city in the far northwest—with the US firm committed to acting as sole offtaker.

Oman, less well-endowed with hydrocarbon resources and thus focused on green rather than blue hydrogen, scored a coup in July by enlisting Germany’s Uniper as offtaker for the most advanced of its three such projects—a relatively small plant, based on 250-300MW of renewable power, planned by Belgium’s Deme and state-owned OQ at Duqm on the east-central coast. A land allocation was sealed in late September, a month after a far larger venture announced in March by India’s Acme was also granted a plot for a plant aimed ultimately at producing 900,000t/yr of green ammonia.

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Author: Clare Dunkley