Aramco, Air Products, ACWA finalize $12 billion Saudi hydrogen, power project

Saudi Aramco and three other partners have finalized an agreement for a $12 billion project that will produce hydrogen and power in the kingdom's southern city of Jazan as the world's biggest oil exporter forges ahead with clean energy.

Aramco, US-based Air Products, Riyadh-based ACWA Power and Air Products Qudra are partners in the gasification and power joint venture in Jazan Economic City, Aramco said in a Sept. 27 statement. Air Products Qudra is a joint venture between Air Products and Qudra Energy, a Saudi renewables company started in 2017 in Riyadh, according to Air Products and Qudra websites.

Aramco has a 20% stake in the joint venture through its unit Saudi Aramco Power Co., it said. Air Products owns 46%, ACWA Power 25% and Air Products Qudra 9%. The joint venture was first announced in 2018.

"The JV is purchasing the ASUs (air separation units), gasification, syngas cleanup, utilities and power assets from Aramco," the statement said. "The JV owns and operates the facility under a 25-year contract for a fixed monthly fee. Aramco will supply feedstock to the JV, and the JV will produce power, steam, hydrogen and other utilities for Aramco."

The joint venture serves Aramco's 400,000 b/d Jazan refinery, which makes products including ultra-light sulfur diesel and gasoline.

Neom city

"We believe the JV will enhance the overall value of the refinery and integrated gasification combined cycle power plant, and aid in transforming the province by positioning Jazan Economic City for additional foreign investment and private sector involvement," Mohammed al-Qahtani, senior vice president of downstream at Aramco, said in the statement.

Ahmed al-Khowaiter, Aramco 's chief technology officer, hopes by 2030 to have enough hydrogen market demand for the company to cater to it on a world scale. Aramco has a target volume of hydrogen it will be able to produce by then, but the company will not publicly disclose what that number is, Khowaiter said June 27 at a media briefing.

Saudi Arabia's planned zero-carbon city Neom in July 2020 formed a joint venture with Air Products and ACWA Power to create a $5 billion green hydrogen project, which is expected to produce about 1.2 million mt/year of ammonia by 2025.

Neom city will require a "multiple" of the 4 GW of renewable energy planned in the joint venture with Air Products as hydrogen will provide the basis for clean feedstock used in the production of fertilizers, chemicals and oil derivatives, Peter Terium, Neom's head of energy, told S&P Global Platts earlier this year.

Saudi industrial giants from Aramco to SABIC and Maaden could get involved in using hydrogen from Neom to produce clean fuels, fertilizers and petrochemicals, he said.

Neom is part of Saudi crown prince Mohammed bin Salman's flagship Vision 2030 project, intended to diversify the economy away from oil.

In September 2020, Aramco also made the world's first blue ammonia shipment, from Saudi Arabia to Japan, for use in power generation.