State-owned Saudi Aramco plans to focus on producing blue hydrogen and ammonia amid a ramp-up of both gas production and CCS technology, rather than investing in renewables to power electrolysis, according to its 2022 annual report.

Aramco plans to expand gas production by more than 50pc by 2030, with the Jafurah field—expected to produce up to 2bn ft³/d (56.6mn m³/d) by 2030—anticipated to provide feedstock for hydrogen and ammonia production. The company also intends to construct a 9mn t/yr CCS project at the Jubail industrial complex, expected to be one of the largest in the world on startup in 2027.

Aramco has also set up a $1.5bn sustainability fund to invest in energy transition technologies, with an initial focus on CCUS, greenhouse gas emissions, energy efficiency and digital sustainability.

11mn t/yr – Aramco’s target blue ammonia production by 2030

The company’s planned investment in CCUS technology and capacity is expected to facilitate the large-scale production of blue hydrogen and ammonia. Aramco targets 11mn t/yr of blue ammonia production by 2030, eyeing exports to Asia, a region that already accounts for c.80pc of Aramco’s crude oil exports.

Last November, Aramco and chemicals company Sabic completed the first commercial shipment of certified blue ammonia to South Korea’s Lotte Fine Chemical. The ammonia was certified by testing sevice provider TUV Rheinland to have captured and utilised a “significant amount of the CO₂” in downstream applications rather than being emitted. Aramco and Sabic had in 2020 tested a 40t shipment of blue ammonia to Japan with 50t of CO₂ captured and used for methanol production and enhanced oil recovery—although this process was not independently certified.

While Aramco says it is “pursuing investments in renewables that align with its other lower-carbon initiatives”, it is coy on its plans for green hydrogen. But this focus on blue hydrogen and ammonia may present a potential risk depending on how ‘low-carbon’ hydrogen is defined and regulated.

“Aramco’s ability to develop low-carbon products and solutions will also depend on the market acceptance of and regulatory support for these products,” the NOC notes.

The EU is progressing its hydrogen and decarbonised gas market package, which is expected to provide support for hydrogen derived from renewables-derived and other low-carbon forms of the fuel to displace fossil natural gas. While Europe is a marginal demand centre for Aramco compared with Asia, the EU last December signed a cooperation agreement on hydrogen with Japan, including an aim for common standards and certifications.

South Korea is also in the process of drafting its clean hydrogen portfolio standard, expected to include requirements for carbon intensity across the lifecycle of the fuel.

Similarly, Aramco adds that the US Inflation Reduction Act may put competitor oil and gas firms at an advantage when it comes to low-carbon projects. “If Aramco is unable to avail itself of similar incentives, its competitive position may be impacted,” the company cautions.

---

Author: Polly Martin