Air Products well-positioned to take advantage of growth in hydrogen demand: CEO

Industrial gas giant Air Products is well-positioned to take advantage of expected growth in hydrogen demand as the decarbonization drive accelerates globally, Seifi Ghasemi, the company's chairman, president, and CEO, said in a Dec. 1 investors' call with Citi analysts.

That increased demand, which could be prompted largely by governmental policies or other incentives, will translate into higher prices as hydrogen markets evolve, Ghasemi told an investor audience.

"We are very bullish that prices might actually go up rather than down," Ghasemi said.

EU policies could drive up demand -- and prices -- for hydrogen produced from fossil fuels with carbon capture technology, also known as blue hydrogen, along with hydrogen produced from renewables, or green hydrogen, he said.

Supply and demand factors, rather than the cost of production, will determine hydrogen prices as markets develop, he said.

"We see significant opportunities for hydrogen whether it is blue hydrogen or green hydrogen," Ghasemi said. "We are in a great position. We are about four or five years ahead of everybody else."

Air Products' is finalizing plans on its $3.7 billion NEOM project in Saudi Arabia, which is projected to sell 1.2 million mt/year of green ammonia when operational in January 2025. Without giving too many details, he said the company is talking to customers about possible uses when the project goes live.

Japanese power stations are potential customers of blue ammonia shipped from Saudi Arabia after it has been converted from hydrogen, he said.

European customers also will seek imported hydrogen from the Middle East where abundant solar resources make it cheap to produce.

Oil majors will be competition for hydrogen business

Competition for hydrogen business will more likely come from global oil majors than traditional industrial gas suppliers as the energy transition unfolds, he said. Oil majors will likely settle for lower returns than Air Products' expected 15% return on investment, he said.

Growth in the US will likely be slower, given less policy support and a still divided population, he said.

"We are not hanging our hat on the basis of a new president, saying 'he's going to do this or that'," he said. "We are going on the trend that over time the public opinion will force the hand and we will go with green hydrogen or blue hydrogen."

For non-western countries such as Indonesia, India and China, the transition will be much slower. Their energy needs will likely continue to be driven by hydrocarbons, he said.

Air Products is well-positioned to take advantage of that business given its gasification business. The company's gasification business will produce hydrogen from coal and ship it to countries like Japan that are looking to reduce carbon emissions, he said.