Egypt’s fledgling green hydrogen industry has received a major boost in the form of offtake commitments for the first two production projects among a range of schemes that have been outlined over the past five years.

In a further boost, the North African nation received another vote of investor confidence in its prospects as a hydrogen hub as BP joined the Abu Dhabi-backed consortium behind another of the schemes.

Cairo has signed numerous non-binding pacts with aspirant international green hydrogen developers in the roughly five years since embracing the nascent sector as a potential driver of long-term economic growth and diversification, envisaging combined investment of more than $50b.

Four of the proposed schemes progressed from memorandum of understanding (MOU) to framework agreement (FWA) status in late June. However, not a single project has made it to FID, due primarily to uncertainly over future demand.

H2Global

Potential buyers are put off by uncertainty of supply and by the price premium. H2Global was established by the German government in 2021 precisely to overcome this industry-wide blockage by means of a ‘double-auction’ process, whereby it acquires green hydrogen-based derivatives and sells them on at rates viable for end-users—with Berlin bridging the financial gap.

Using existing downstream facilities future-proofs Egypt’s substantial fertiliser sector as European carbon border taxes start to bite

In mid-July, Abu Dhabi government-owned fertiliser giant Fertiglobe won the first ammonia supply contract awarded under the H2Global programme, committing to supply green ammonia sourced from its Egyptian operations. The company won the contract with a bid of €1,000/t, including delivery to Europe (compared with an auction ceiling of €1,282/t [$1392/t]) and a net price of €811/t—implying green hydrogen pricing of around €4.5/t. Deliveries are due to start at 19,500t/yr in 2027, rising to 40,000t/yr in 2028–33, with options for Hintco, the H2 Global-owned intermediary vehicle, to take an additional 17,500–33,000t/yr .

The H2Global award triggered the signature by Egypt Green Hydrogen—a consortium led by Norway’s Scatec, in which Fertiglobe is a minority partner—of a 20-year offtake agreement to supply Fertiglobe with green hydrogen from an integrated 100MW scheme planned at Ain Sokhna, on the Gulf of Suez. Fertiglobe operates an ammonia and urea plant at the same site and will use it to convert the hydrogen into ammonia for export to Germany under the contract with Hintco.

Oslo-based Scatec further strengthened its position in Egypt’s hydrogen sector in late June, signing a lower-profile but arguably equally significant deal directly with a commercial offtaker to supply carbon-free ammonia produced by feeding green hydrogen into an existing local fertiliser plant, in this case owned by the government’s Misr Fertilisers Production Company (Mopco).

The heads of terms envisages Norway’s Yara Clean Energy acquiring output from the 150,000t/yr green hydrogen and ammonia plant at Damietta, on the Mediterranean coast, in partnership with Mopco and fellow parastatal E-Chem.

Future proofing

Commissioning is again scheduled for 2027, with project costs put at $890m. Using existing downstream facilities is not only financially advantageous, reducing costs and enabling more competitive pricing, but future-proofs Egypt’s substantial fertiliser sector, as European carbon border taxes start to bite, and as importers begin demanding products with cleaner lifecycles. In so doing, it also insulates Western developers of African renewables from charges of a neo-colonialist resource grab.

Scepticism engendered by the growing pile-up of provisional Egyptian green hydrogen projects, all still awaiting FID, is mitigated by the calibre of the prospective investors involved—including major clean energy players from across Europe, the Mideast Gulf and Asia. In late June, BP, one of the country’s biggest oil producers, added its name to the roster, joining existing sponsors Emirati renewables champion Masdar and local firms Hassan Allam Utilities and Infinity Power (both local) as lead developer on a planned €13.5bn, multi-phase project at Ain Sokhna first announced by the Masdar in 2022 and now advanced to FWA stage. The first 330,000t/yr of green ammonia is due onstream in late 2030, followed by the full 2.5mt/yr capacity two years’ later.

€1,000/t – Delivered ammonia price

The pact reflects growing collaboration worldwide between the UK oil major and Abu Dhabi’s energy parastatals, including blue and green hydrogen project tie-ups in the UK itself with, respectively, Emirati NOC ADNOC (Fertiglobe’s owner) and Masdar.

The scheme also highlights the wealthy’s emirate’s burgeoning investment in Egypt’s economy in general, and energy sector in particular—as a form of support for a close and financially struggling political ally. On the same day, Masdar’s project formally progressed to the next development stage, TAQA, also Abu-Dhabi–owned, and France’s Voltalia inked an FWA with Cairo on a green hydrogen project to be developed in two 130,000t/yr phases in the Suez Canal Economic Zone (the country’s intended hydrogen hub)—upgrading an MOU from 2022.

Egypt–EU investment

The flurry of deal-making occurred during the Egypt–EU Investment Conference, at which energy sector cooperation was a major theme. France’s EDF and local/UAE firm Zero Waste also signed an FWA, which included the Red Sea Ports Authority (RSPA) among the typical state counterparties, to develop an estimated €7b, three-phase scheme producing green hydrogen and its derivatives at Ras Shuqair, further south on the Gulf of Suez. Unusually, the project outline encompassed planned development of the supporting infrastructure—including the private partners financing and building a 400-metre quay for RSPA.

Meanwhile, Germany’s interest in tapping its North African counterpart’s superior renewables resources was reaffirmed, as Frankfurt-based DAI Infrastruktur upgraded a two-year-old MOU to an FWA on so-called Project Ra—a proposed €10.2b, 1.7mt/yr green ammonia scheme at East Port Said, at the Mediterranean end of the Suez Canal. Startup is envisioned in 2028, with output intended for use in bunkering. DAI signed an MOU on a potential 400,000t/yr, ten-year offtake agreement with Greece’s Naftomar Shipping and Trading in June 2023.

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Author: Clare Dunkley