Design work on the first phase of Saudi Aramco’s flagship CCS project was declared complete in early June, paving the way for belated assignment of the construction work, while Emirati NOC ADNOC awarded the main contract in May on its first blue hydrogen scheme.

The twin developments are testament to the multiple portfolio diversification strands being pursued by the Mideast Gulf’s two most dynamic NOCs—at home and, increasingly, overseas—but also to the inevitably patchy progress, as both the historically crude oil-focused firms test out novel technologies and adapt to uncertain future market dynamics.

Aramco unveiled plans to develop a vast CCS hub at Jubail, a downstream hub in the oil-rich Eastern Province, in 2022, during a pivotal period when the company and its government owner shifted from a predominantly defensive stance towards international energy sector decarbonisation pressures to (like their Emirati counterparts) one attempting to lead the conversation—pitching the Kingdom as a crucial and pioneering part of a solution that unashamedly encompasses continued hydrocarbons production.

Firms are testing out novel technologies and adapting to uncertain future market dynamics

During the same year, the firm set goals to reduce upstream carbon intensity by 15% (from a 2018 baseline) by 2035 and produce 11mt/yr of blue hydrogen by the end of this decade. The characteristically gargantuan Accelerated Carbon Capture and Storage project ultimately envisages sequestering 44mt/yr of CO₂ from Aramco’s own operations and those of other domestic industrial emitters—making the scheme an important contributor to corporate and national targets to reach carbon neutrality by 2050 and 2060 respectively.

In November 2022, Aramco signed a joint development agreement with Germany’s Linde and the US’ SLB to develop the 9mt/yr first phase—the unusual external equity involvement in the domestic upstream sector reflective both of the company’s lack of expertise in deploying the technology at-scale and possibly also of impending financial strains, as the company is forced to invest heavily to adapt its entire business to the changing international energy landscape while increasingly being called upon to fund Riyadh’s broader economic diversification strategy—in the context of anticipated long-term oil price decline.

The initial project will capture emissions from three Aramco-owned gas plants, from the operations of its petrochemicals subsidiary Sabic, and from those of US/local industrial gases company Air Products Qudra and pipe it some 240km for injection into a saline aquifer. Designs have undergone considerable revision since the scheme’s launch, delaying award of the estimated $1bn EPC contract (in which companies were invited to express interest back in early 2023) and casting doubt on the envisaged 2027 completion date, despite its restatement in the prospectus for the firm’s public share sale in May.

However, completion of FEED study by the UK’s Wood Group should lead to an award in the coming months, with Italian firms Saipem and Tecnimont, and India’s Larsen & Toubro, reportedly the front-runners. Future phases have yet to be mapped out in detail, but Aramco’s separate target is to reach 14mt/yr of CCS capacity by 2035.

Head start

ADNOC had a head start in sequestration, having commissioned a pioneering 800,000t/yr plant capturing emissions from state steelmaker Emirates Steel Industries for use in oilfield injection in place of scarce natural gas in 2016. It awarded the EPC contract on its second (a 1.5mt/yr facility collecting CO₂ emitted at the Habshan gas complex in western Abu Dhabi) to the UK’s Petrofac in October—the same month it doubled its end-decade CCS goal to 10m t/yr—a major subcontract was let in March and completion is due in 2026, assuming progress is unaffected by the main contractor’s financial difficulties.

Building on its carbon-capture expertise, the Emirati behemoth is also outpacing its Gulf rival in the development of blue hydrogen, of which both NOCs have stated aims to become major global producers by 2030.

Nonetheless, its debut (and thus far only) domestic project has faced delays, with FID still pending in mid-June, three years since ADNOC’s fertiliser subsidiary Fertiglobe first outlined the scheme (comprising a 1.2mt/yr blue ammonia plant in western Abu Dhabi) and despite the crucial advantage of the three shareholders—also including Japan’s Mitsui and South Korea’s GS Energy—committed to purchasing the output.

However, formal go-ahead now appears a formality after Tecnimont was awarded the main construction contract in late May. Weeks earlier, ADNOC exported its first-ever commercial-scale cargo of blue ammonia, to the Japanese partner, - sourced from Fertiglobe’s existing fertiliser plant at Ruwais, where a modular carbon-capture technology developed by UK-based Carbon Clean is separately being piloted.

44mt/yr – Aramco CCS target

 

Also in May, the UAE firm signed agreements with GS, Korea National Oil Co. and compatriot Samsung E&A to explore the co-development of production and export infrastructure in Abu Dhabi for the supply of blue ammonia to South Korea—where ADNOC, under a deal inked in February, is exploring the possibility of partnering with local steelmaking titan Posco on a plant making blue hydrogen from LNG for use in abatement of the latter’s operations.

The resource-poor Asian nation is likewise central to Aramco’s blue hydrogen ambitions—comprising a now-improbable goal to produce 11mt/yr by 2030. The only concrete project thus far mentioned is a $15.5bn blue ammonia scheme at Ras al-Khair, near Jubail, which was the subject of a letter of intent with Korea Electric Power Corporation, Posco and Lotte Chemical in October, but no further details have been disclosed.

The Saudi firm has publicly acknowledged the difficulties experienced in trying to reach offtake deals at current production prices, and neither its annual report nor its recent share prospectus mentioned the putative scheme. Alternative uses for the new gas supplies coming incrementally onstream from its flagship Jafurah unconventional gas development, as feedstock for first LNG exports or petrochemicals expansion, are being mulled.

Direct air capture

Meanwhile, both NOCs are increasingly putting their vast financial resources behind the development of new methods of carbon capture—notably (and predictably) direct air capture (DAC), to the chagrin of those who regard the embryonic technology as a largely unproven, inefficient excuse for its oil company champions to continue pumping hydrocarbons.

In May, in the presence of both countries’ energy ministers, Aramco entered a memorandum of understanding with US-based startup Spiritus to collaborate on enhancing the latter’s proprietary DAC technology, including its potential piloting and deployment at-scale in the Kingdom—having participated in a funding round for the firm last year.

In March, the Saudi giant injected $80m into Los Angeles-based CarbonCapture, another DAC-focused startup. A corporate update that month also reported that a DAC test unit built at its Dharan base in collaboration with Germany’s Siemens was on track for commissioning this year, with a 1,000t/yr pilot plant due onstream in 2025. ADNOC has set its sights higher, working with long-time US upstream partner Occidental Petroleum on a technical feasibility study of a potential 1m-t/yr DAC plant in the emirate under a pact inked last October.

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Author: Clare Dunkley