Saudi state-owned energy company Aramco has restated its aim to be a leading supplier of blue hydrogen and ammonia despite recent difficulties in securing long-term offtake deals with potential buyers because of high costs.

“The company’s goal of producing up to 11mn t/yr of blue ammonia, a carrier of blue hydrogen, by 2030 remains unchanged,” the NOC says. “Aramco continues to work with potential customers and other stakeholders around the world, and is making real progress across the blue hydrogen value chain.”

11mn t/yr – Blue hydrogen 2030 production target

Recent progress includes receiving the world’s first independent certification for blue ammonia and blue hydrogen production, as well as delivering three shipments of blue ammonia to customers in Asia, Aramco adds.

Saudi energy minister Abdulaziz bin Salman Al Saud also struck a bullish note at a major hydrogen industry event in the Netherlands. “The mindset that we have is that we want to be the prominent supplier of hydrogen,” he told the World Hydrogen Summit in Rotterdam after signing a memorandum of understanding on green energy and hydrogen cooperation with the Netherlands.

Price resistance

The reiteration of its blue hydrogen target comes after Aramco’s president and CEO Amin Nasser said high costs had hampered efforts to secure offtakers in Europe and Asia. He put the cost of Saudi blue hydrogen at about $250/bl oe.

“We want to expand our market base in blue hydrogen. However, the issue is offtake. It was very difficult to identify any offtake agreements in Europe and they explained it is because of the high cost, [which is] much more than LNG,” Nasser told analysts on an earnings call. “We are in discussions with customers in Japan and Korea and they are waiting for their government incentives. Until they get these incentives, it will be costly for them to pursue that blue hydrogen.”

Despite the lack of offtake deals, Aramco is “on track for the first increment” in blue hydrogen production, Nasser says. But he also warns that further blue hydrogen projects will not be sanctioned without having offtake deals in place, mirroring the strategy with LNG projects.

LNG option

If offtake deals remain difficult to achieve, then Aramco would need to consider channelling more gas into local demand and LNG export markets. “This is the discussion that is currently going on with the Ministry of Energy,” Nasser says.

“We are looking at LNG,” he adds. “We put our discussion on the backburner in the past during the pandemic with regard to our out of Kingdom LNG opportunities. However, we started the discussion with our partners globally.”

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Authors: Polly Martin, Stuart Penson