INTERVIEW: India's ONGC to issue EOIs for 1 mil mt renewable ammonia plant in 2024

India's oil and gas exploration firm ONGC will issue expressions of interest in 2024 to select a partner for a 1 million metric ton renewable ammonia plant to be set up by 2030, a senior official in charge of energy transition said July 19.

ONGC will spend Rupee 2 trillion ($24 billion) on new energy and decarbonization projects to reach its net zero target (Scope one and Scope two) by 2038, the oil and gas explorer said in its Decarbonization Roadmap issued this month.

"In about three months, we will be issuing expressions of interest for selection of a partner," Harsh Nupur Joshi, chief operating officer of ONGC Green, a wholly owned subsidiary of ONGC, told S&P Global Commodity Insights.

"The EOI will have some criteria like what the partner will offer -- technology, equity or offtake arrangement," Joshi said. "Through this EOI, we will be in the market to find any big Indian player or a foreign player, and based on the matrix, we will select a partner."

ONGC Green plans to commission the renewable ammonia plant by 2030, doubling the capacity to 2 million mt by 2035 by adding another renewable ammonia plant of the same size, Joshi said.

According to Joshi, ONGC Green was formed in February with the mandate of having 10 GW of renewable energy capacity by 2030, and a blueprint is now being prepared, which may even upgrade the goal.

The company is looking into the adoption of multiple pathways for energy, including wind, solar, pumped hydro and compressed biogas, in addition to renewable hydrogen/ammonia, Joshi added.

ONGC is the largest crude oil and natural gas company in India, producing over 1.26 million b/d of oil equivalent, accounting for around 71% of India's domestic production.

"Getting offtake interest is the most difficult part right now. We are hoping the partners will help us secure deals," Joshi said.

According to Joshi, an agreement the company had signed with hydrogen developer Greenko expired as they "could not culminate it into a successful partnership".

Cost

India would be one of the lowest-cost producers of renewable hydrogen and ammonia owing to its low-cost renewable energy, the major cost component for renewable hydrogen/ammonia.

"As [of now], the green hydrogen cost is around $3-$4/kg," Joshi said. "Our first project comes around by 2027-2030... depending on how the market evolves, at that time, the cost will be somewhere around $2/kg."

Joshi said renewable ammonia costs range from $700/mt to $750/mt in India. However, to be commercially viable around 2030, it needs to lower to levels of $450-$500/mt.

The government is expected to announce mandatory renewable hydrogen consumption targets, which could stimulate demand.

"Refineries and fertilizer units are expected to get the target first, then maybe at a later stage, the hard-to-abate sectors," Joshi said, adding that it can "start with 10% and gradually be increased in phases".

Platts, part of Commodity Insights, assessed UAE hydrogen produced via alkaline electrolysis (including capex) unchanged on the month at $6.80/kg July 22.

Platts assessed Japan hydrogen produced via alkaline electrolysis (including capex) at $6.68/kg July 22, up 34% month on month.

Offshore wind

ONGC will spend Rupee 300 billion on 5 GW of solar and onshore wind capacity by 2030, according to its Decarbonization Roadmap. It will also set up 500 MW of offshore wind capacity at a cost of Rupee 125 billion by the same year.

"At the end of the day, we have the expertise of working offshore," Joshi said. "So offshore wind is also going to be an important element of our blueprint."

The company has a memorandum of understanding with NTPC Green, signed at the India Energy Week in February, and the parties are now in the process of incorporating the company by year-end to work mainly on offshore wind, Joshi said.

The government came out with two types of tenders for seabed leasing and recently announced another tender with viability gap funding. ONGC Green is interested in both, Joshi added.

Technology

ONGC Green is in discussions with various players to enter Carbon Capture Utilization and Storage as a business opportunity, even though the company does not generate much carbon of its own.

"In the renewable energy domain, you never know which element will come up as a surprise and take up the market," Joshi said, speaking about ONGC Green's portfolio of energy transition projects. "That is why people are waiting, so that technology gets fully mature [so they can] bet on the best option... that is why it is taking time."