Saudi Arabia reached milestones for both green and blue hydrogen as 2022 came to a close, with the first commercial shipment of blue ammonia to a South Korean customer and financing agreements signed for the multi-gigawatt Neom green hydrogen plant.

Like its chief economic rival the UAE, Saudi Arabia recognised early on in its hydrogen journey the potential to tap longstanding energy supply relationships with South Korea and Japan based on crude oil exports for future hydrogen trade. Government-owned oil company Saudi Aramco beat its Emirati counterpart to deliver its first 40t test cargo of blue ammonia to Japan in September 2020, and in December 2022, the Saudi and Japanese governments signed a memorandum of cooperation calling for broad collaboration in the energy transition.

25,000t – Blue ammonia delivered from Sabic to Lotte

However, it is Seoul with which Riyadh has thus far developed the deeper hydrogen partnership, symbolically highlighted in December via the delivery by Aramco subsidiary Sabic of 25,000t of blue ammonia produced at its fertiliser complex at Jubail on the Kingdom’s east coast to South Korea’s Ulsan port, for use by local counterpart Lotte. The carbon captured during its production was deployed in an Aramco-owned refinery nearby, generating an overall carbon footprint low enough to be certified as blue by independent German certification agency TUV Rheinland in August.

Despite a tight gas supply for domestic needs and the absence of a single standalone production project, Riyadh aims to become the world’s leading blue hydrogen producer by 2030, with Aramco implying production of at least 11m t/yr. Hopes have been pinned on natural gas due to come onstream in 2025 from the giant Jafurah field, which is in the early stages of development in the southeast.

South Korean firms would be strong candidates as potential equity partners for associated downstream elements such as blue hydrogen. The Asian country already has a major existing downstream tie-up with Saudi Arabia through Aramco’s majority ownership of S-Oil, South Korea’s state’s third-largest refiner, which took FID in December on a $7bn petrochemicals-focused expansion at its Ulsan refinery.

Riyadh’s plans for green hydrogen are moving faster than those for blue. In November, sovereign wealth vehicle the Public Investment Fund signed a memorandum of understanding with utilities Korea Electric Power Corporation and Korea Southern Power Company, state oil firm Korea National Oil Corporation, steelmaker Posco and construction company Samsung C&T to develop a 1.2mm t/yr green hydrogen and ammonia complex at Yanbu, an industrial city on the west coast, at an estimated cost of around $6.5bn.

The project’s outline is almost identical to the Kingdom’s first green hydrogen venture at the planned Neom city, also spearheaded by the PIF alongside government-affiliated renewables firm Acwa Power and US industrial gases company Air Products. A government priority, the scheme is advancing rapidly from drawing board towards execution. In mid-December, project company Neom Green Hydrogen Company signed facility agreements with local and international banks on a dollar-denominated debt package. It also announced an unspecified commitment of cash from the Saudi Industrial Development Fund, one of the state investment vehicles enjoying a boost in financial firepower from the government’s windfall oil revenues.

A construction contract for the Neom project thought to be worth several billion dollars has also been signed with India’s Larsen & Toubro to install the requisite solar and wind power generation and transmission facilities. Startup is scheduled for 2026.

Riyadh has often deployed Acwa’s renewables prowess as a tool to build or cement international political alliances. The strategy was extended to hydrogen last year for Saudi crown prince and de-facto head of state Mohammed bin Salman’s efforts to improve relations with Muscat.

In May, Acwa and Air Products announced they would develop a green hydrogen and ammonia complex at Salalah in southern Oman. In late December, an official from Omani state-owned local partner OQ for the first time revealed details of capacity—1.1mn t/yr of green ammonia based on a 2GW electrolyser fed by 3GW of renewables—although no timetable was given.

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Author: Clare Dunkley