Saudi Arabia Plans to Become A Top Player in Using Hydrogen As Fuel

Saudi Energy Minister Prince Abdulaziz bin Salman has recently discussed prospects for cooperation in the field of clean hydrogen with his UK counterpart. The Saudi minister has earlier stressed that the Kingdom will dominate the production of green hydrogen, and emphasized that it is working with many European Union countries to ensure the expansion of the market.


Not only the UK, Saudi Arabia, and Japan signed a memorandum of cooperation (MoC) on Sunday in the fields of the circular carbon economy, carbon recycling, clean hydrogen, and fuel ammonia.


The MoC was signed by Energy Minister Prince Abdulaziz Bin Salman and Japanese Industry Minister Yasutoshi Nishimura, who was visiting the Kingdom.


The two ministers held the first ministerial meeting of the Saudi-Japanese energy dialogue in Riyadh.



“Some may not like to see Saudi Arabia also dominating the green hydrogen market, but we will reach this position and hopefully be the least expensive producer of green hydrogen,” Prince Abdulaziz bin Salman said.


Aramco’s Hydrogen Ambitions



Aramco is also investing billions of dollars in hydrogen, a fuel is seen as crucial to the transition to cleaner forms of energy.

The Saudi firm aims to export blue hydrogen, made by converting natural gas and capturing the carbon dioxide emitted in the process, on a large scale from about 2030.


Talks with potential importers in Japan and South Korea are progressing, though they’ll probably need to get assurances of financial support from their governments before they sign any supply contracts, Saudi Aramco’s chief executive officer, Amin Nasser said.

“They think they’ll be able to do it in 2023,” he said. “We’ll see.”

Blue hydrogen may end up costing the equivalent of around $250 a barrel of oil, Nasser said, though Aramco won’t know until it’s done more research.

“It’s not going to be $80 or $100 a barrel,” he said. “This is cleaner — it costs more.”

Negotiations with European firms are proving tougher, primarily because they want to wait for technological advances to bring down the price of blue hydrogen.

“It is very difficult to get an off-take agreement, especially in Europe,” Nasser said.



Blue hydrogen


In 2022, the Saudi energy minister revealed the kingdom’s interest in producing blue hydrogen and pink hydrogen, as it was called.


He said, “We are the cheapest producer of gas, and we have huge investments in shale gas in Saudi Arabia, and we will allocate an amount of this gas to be used in the production of blue hydrogen.”


He also indicated that Saudi Arabia may witness the production of pink hydrogen “when we make our nuclear investments, and we hire young Saudi women who are happy with this pink hydrogen.”



Climate change as an excuse to move from fossil fuels


The Saudi energy minister stressed that some are using climate change as an excuse to move away from fossil fuels.


He said, “I emphasized during my participation in Sustainability Week in Abu Dhabi that we do not have to choose the source of energy on which each country depends, but rather the country must choose according to the natural resources available to it.”


He continued, “We are all rallying around the reduction of all greenhouse gas emissions, and that we must use all available tools, and even create any new ones, to reach this goal.”


However, he asked, “Do we want to reach that goal? Or do we use it as the excuse that we have to get rid of hydrocarbons and fossil fuels?”


He also said: “Do we support the elimination of hydrocarbons and fossil fuels under the pretext of climate change, or are we interested in climate change?”


“If the answer is yes, then we must be indifferent to any source of energy used as long as it works to mitigate climate change,” Prince Abdulaziz confirmed.




The Saudi Energy Minister stressed that the central pillar of providing energy in the world is to “ensure that everything we do is consistent with maintaining energy security.”


He explained that the world has abundant resources that must be used effectively, from hydrocarbons, fossil fuels, renewable energy and hydrogen, stressing that “we must guarantee the world that no matter what happens, the global economy will continue to be supplied with energy.”


Prince Abdulaziz reiterated that the three pillars are energy security, economic growth and prosperity, sustainability, and climate change; “We cannot reach our goals without them, and one cannot lose one pillar for another.”




Hydrogen industry strategy in Saudi Arabia



Saudi Arabia’s interest in hydrogen stems primarily from its desire to ensure economic security. Hydrogen can help the world’s largest crude oil exporter meet several key tasks of Saudi Vision 2030: diversify its exports, take advantage of existing sectors’ supply chains to increase domestic content, and develop new industrial sectors.




In fact, Saudi Arabia wants to become the largest supplier of hydrogen in the world. Hydrogen production will allow the kingdom to become less dependent on domestic oil as a major source of income from global markets. This may be of particular value to the Kingdom in a carbon-restricted world marked by a wave of net-zero targets from governments and industries around the world.




Furthermore, hydrogen production speaks to the Kingdom’s current experience and supply chain capabilities, such as its expertise in industrial-scale production of hydrogen and chemicals, as well as carbon dioxide capture and storage. Its expertise and capabilities can help support the Saudi vision of producing and exporting commercially viable hydrogen, which is based on hydrocarbon resources with Carbon Capture, Use, and Storage (CCUS) from emissions (blue hydrogen).



In addition, hydrogen from renewable energy sources (green hydrogen) could mean a new industrial sector for Saudi Arabia, a large part of which is located in the sunbelt and has large areas of flat land for solar panels. The Kingdom has announced plans to install around 27 gigawatts of mostly solar energy by 2023 and nearly 58 gigawatts by 2030. However, the installed renewable energy capacity in the kingdom remains limited today. As of the first half of 2020, the utility-scale PV capacity is 330 MW. This raises the question of the timeline in which Saudi Arabia’s vision of hydrogen may materialize with supplies based on renewable energy sources.




The development of the clean hydrogen industry, particularly the use of blue hydrogen, will also reflect the Kingdom’s growing pursuit of a circular carbon economy, a framework for managing and reducing emissions through carbon reduction, reuse, recycling and removal. Domestic consumption of clean hydrogen, such as in transportation, will help reduce the carbon profile of Saudi economic activities. Furthermore, the Kingdom can position itself as a facilitator of the global energy transition by proactively marketing clean hydrogen supplies to hydrocarbon-importing countries that wish to purchase low-carbon energy sources. In the meantime, it remains to be seen what the development of clean hydrogen might mean for the role of natural gas in the kingdom. Will its interest in exporting hydrogen replace the previous Saudi interest in exporting natural gas — via pipelines or ships? Will blue hydrogen provide a new outlet for its natural gas?




A formal strategy or roadmap is reportedly under development. Although there is no clear outline of overall priorities and policies or goals and timelines, various statements from political leaders and corporate executives provide insight into how Saudi Arabia is pursuing hydrogen deployment. Furthermore, the scope and depth of the hydrogen strategy will be closely linked to the UK’s carbon use and storage strategy, as the pace at which the scale of CO2 use develops outside of EOR could significantly impact the commercial viability of blue hydrogen production.




Saudi Arabia is exploring ways to become the world’s largest supplier of hydrogen and has targets for clean hydrogen production of 2.9 million tons per year by 2030 and 4 million tons per year by 2035. The current focus is on capturing a significant market share of blue hydrogen, particularly in Form of blue ammonia (ie, ammonia produced from ammonia synthesis using hydrocarbons CCUS) in the next decade.




Saudi Arabia took a big step in September 2020, when state oil company Saudi Aramco shipped 40 tons of blue ammonia from Saudi Arabia to Japan. This was the world’s premiere of blue ammonia supply chains, involving the production and international maritime transport of blue ammonia. This project reaffirmed Aramco’s view that existing technology solutions (such as extraction, processing, and conversion of natural gas to hydrogen and ammonia) can help provide cost-effective, scalable, low-emissions solutions.




The kingdom is also working with South Korea. Aramco has entered into a memorandum of understanding with Korea’s Hyundai OilBank, which plans to take shipments of liquefied petroleum gas (LPG) from Saudi Aramco, convert LPG into hydrogen, and ship the CO2 emitted in the process back to Saudi Arabia.




Hydrogen based on renewable energy sources is a major focus of technological and economic experiments in the futuristic city of NEOM. NEOM features a $5 billion green hydrogen project, a joint venture between NEOM, Riyadh-based ACWA Power and Pennsylvania-based Air Products. Expected to start in 2025, the project’s 4 gigawatts of renewable capacity will make it the world’s largest renewable hydrogen-to-ammonia facility, producing 1.2 million tons per year of green hydrogen – equivalent to approximately 5 million barrels of oil per year in energy (By comparison, annual Saudi crude oil production is around 12 million barrels per day).




On the consumption side, hydrogen use in the transportation sector is under active exploration. Since the construction of its first hydrogen fueling station in 2019, Saudi Arabia has tested Toyota Motor’s fuel cell electric vehicles (FCEV) along the lines of the Mirai sedan at the Atmospheric Products Technology Center in Dhahran Valley Science Park, finding them “fit for the Mirai”. kingdom.” In September 2020, South Korea’s Hyundai Motor Company exported its first-ever FCEV to Saudi Arabia (or the Middle East), where Aramco will test its FCEV NEXO buses (and FCEV Elec City buses) for economic viability. . There is also exploration to establish FCEV-related manufacturing capabilities in Saudi Arabia with the participation of companies from North America and Europe, including New York-based Hyzon Motors to build an assembly plant for FC trucks and Gaussin in France to build a manufacturing facility for off-road and off-road FCEVs.





Saudi Geography and Hydrogen Ambitions



The blue hydrogen industry in Saudi Arabia is likely to develop around the industrial and natural resources in the eastern part of the kingdom while the green hydrogen industry is likely to be nurtured in the northwest, initially.




The country’s blue hydrogen vision entails the country’s ability to tap into several existing carbon storage and storage-related assets, such as the CO2-to-EOR project in Uthmaniyah and the CO2-to-chemicals project in Jubail, both along the Persian/Arabian Gulf.




The Kingdom also has an interest in benefiting from its wealth of natural gas resources. For example, the country plans to use a significant portion of the natural gas from the Jafurah field to produce blue hydrogen. Located roughly equal distances between Riyadh and the Saudi-Qatari border in the east of the Kingdom, the Jafurah field is the largest non-associated gas resource discovered in Saudi Arabia, containing 200 trillion cubic feet of gas; Aramco aims to produce gas from the $110 billion project in 2024.




Meanwhile, the city of NEOM, which is being developed in the country’s northwest corner on the Red Sea, is expected to play a central role in the Saudi interest in providing green hydrogen supplies.


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