The weather report for Mena hydrogen

Hydrogen is enjoying mixed fortunes in the region – but the long-term outlook is good, according to a study published this month.

In Saudi Arabia, a partner in the $8 billion Neom green hydrogen complex has said the project is nearing completion and negotiations on a big deal to export ammonia – one of the vectors for exporting hydrogen – are in its “final stages”.

Last year Tadawul-listed Acwa Power, a major power supplier and shareholder in the Neom complex, said it had signed an agreement with German energy company Securing Energy for Europe to supply 200,000 tonnes of green hydrogen a year by 2030.

Acwa has also signed a preliminary agreement with EnBW, another German energy company, to create a green ammonia “corridor” to help decarbonise hard-to-abate sectors.

At Yanbu in western Saudi Arabia, Sinopec of China and Técnicas Reunidas of Spain have been awarded a contract to build a major plant for Acwa. It is due to produce 400,000 tonnes of green hydrogen and 2.8 million tonnes of green ammonia annually, via wind and solar.

From the UAE, Abu Dhabi-listed fertiliser maker Fertiglobe won a bid in 2024 to supply renewable ammonia to the European Union from its plant at Ain Sokhna, Egypt.

The UAE company is working on other low-carbon ammonia projects, including Ta’ziz, a 1 million tonnes-per-annum low-carbon ammonia facility in Abu Dhabi.

So much for the good news.

Further south in Oman, the managing director of Hydrom, the state hydrogen champion, told a conference in December that BP had pulled out of a major scheme in Duqm. France’s Engie and South Korea’s Posco have abandoned HyDuqm, another big project in the sultanate, according to reports.

Oman, which has committed to becoming one of the top producers of green hydrogen by 2030, is not alone in suffering the withdrawal of energy majors. Exxon Mobil has paused development of a hydrogen project in Texas while BP pulled out of another scheme in the UK.

The main reason is, of course, cost – and the difficulty in finding offtakers willing to pay a premium for carbon-neutral energy.

In Mena, 98 percent of hydrogen is produced from unabated fossil fuel, according to DNV, an Oslo-based consultancy. Fossil fuel hydrogen costs only $1.50 per kilogram. Gas produced with steam methane reforming and carbon capture and storage is still $2.20.

In DNV’s report on oil and gas decarbonisation in the Gulf, it says that in the short term Mena will lag behind other hydrogen-producing regions such as Europe, North America and China.

In part this is because of all the efforts going into liquefied natural gas and crude oil, according to DNV. And in part because better regulation is needed.

But the consultancy thinks Mena will account for 16 percent of global hydrogen production for energy purposes by 2040 – and will become the world’s largest hydrogen exporter by 2060.

DNV says the region is well positioned between major growth markets in East and West and expects hydrogen exports of 9 million tonnes a year mainly to Europe, Japan and South Korea. In other words, Mena will fulfil much the same function as it does in oil and gas – but with quite a delay.

We await the news of more green hydrogen offtake agreements with interest.

• Acwa Power to build green ammonia corridor with Germany
• Oman’s OQGN plans $1bn pure hydrogen network
• Frank Kane: Who will buy the fuel of the future?