Abu Dhabi’s drive to carve out a place in the emerging international hydrogen and carbon-management landscape is gathering pace, with its twin energy parastatals signing deals in the East Asian and European markets.

Adnoc entered a novel agreement in January to consider co-developing a plant producing blue hydrogen from LNG in South Korea with Korean steelmaking titan Posco. Separately, clean energy developer Masdar signed the latest in a string of pacts to collaborate on supply chain development with prospective EU green hydrogen importers.

Historically focused solely on domestic hydrocarbons production, the dual imperatives of portfolio decarbonisation and revenue diversification away from crude oil exports have propelled Adnoc to spread its international investment wings over the past year.

Developing or acquiring gas and petrochemicals assets overseas forms one strand of the push. The other comprises ventures into the burgeoning global low-carbon energy business: in January it raised its investment target for low-carbon solutions by the end of the decade by 50%, to $23b, weeks after making its debut international equity investment in carbon management by acquiring a 10.1% stake in Storegga, a UK-based company developing a 10mt/yr CCS complex in northeast Scotland.

The first concrete sign of the oil and gas company’s intent to produce blue hydrogen abroad emerged in April 2022 in the form of a 25% stake in the design phase of a project led by BP to produce the fuel in northeast England.

$23b – Investment target

It announced its first, and thus far only, domestic production scheme the previous year, agreeing with fertiliser affiliate Fertiglobe—a wholly owned subsidiary since December and intended to be Adnoc’s blue ammonia platform—to develop a 1mt/yr blue ammonia plant at the Ruwais downstream hub in western Abu Dhabi. 

Japan’s Mitsui and South Korea’s GS Energy have subsequently joined the project, although FID remains pending. Seoul and Tokyo have been central to the emirate’s hydrogen planning from its outset. 

Posco was also early in hatching plans to become a major producer and consumer of hydrogen to abate emissions from its roughly 43mt/yr steelmaking capacity—adopting a net-zero strategy in 2020 that included producing 500,000t/yr of blue hydrogen by 2030 “in partnership with global companies”. The firm has already been looking to tap the Mideast Gulf’s enormous green hydrogen production potential to decarbonise its domestic operations: it leads a consortium awarded a land concession in Oman last year for the proposed development of a 1.2mt/yr green ammonia plant and is part of an all-Korean quintet that provisionally committed to investing in construction of a similar facility in western Saudi Arabia in late 2022.

However, in July the company announced plans to develop a local hydrogen supply system with 1.26mt/yr of capacity by 2035, including 540,000t/yr to be produced from gas imported to its Gwangyang LNG terminal for use in decarbonising steel production at its flagship 23mt/yr mill nearby—the project to which the strategic cooperation agreement with Adnoc relates. The pact commits the firms to assessing the scheme’s feasibility and calculating the optimal size of the associated CO₂ capture and liquefaction terminal.

Carbon storage

Posco’s choice of the Emirati firm as international partner was based partly on its carbon-sequestration expertise: it started up the world’s first commercial-scale CCS plant in Abu Dhabi in 2016, capturing 800,000/yr of CO₂ from local steel production for use in oilfield injection. And it awarded the main contract on a second 1.5mt/yr facility at its Habshan gas-processing complex in December. In September, the company doubled its end-decade CCS capacity target to 10mt/yr, without elaborating on the proportion envisioned as being derived from overseas.

The other geographical focus of the UAE’s international hydrogen planning is Europe. Adnoc delivered its first cargo of blue ammonia to the continent in late 2022, but the EU’s interest is primarily in green hydrogen and its derivatives. This means Masdar, which aims to produce 1mt/yr of green hydrogen worldwide by 2030, is positioned well to secure a share of EU demand.

Several deals have been struck over the past two years to collaborate with prospective Austrian, Dutch and German importers on developing a green hydrogen supply chain. On 30 January, French shipping giant CMA CGM joined the roster, signing a strategic supply partnership agreement with Masdar to explore potential long-term offtake contracts enabling the delivery of green maritime fuels from 2025.

Masdar is also making inroads into the German market. It recently signed a memorandum of understanding with truck manufacturer Daimler Truck to explore potential collaboration on the supply of liquid green hydrogen for use in decarbonising European road freight.

Masdar is also working with northern European counterparts to ensure the requisite import infrastructure is in place: in December, it signed a joint study agreement with three Dutch companies to investigate the creation of a supply chain for liquefied green hydrogen to the Port of Amsterdam.

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Author: Clare Dunkley