Abu Dhabi National Oil Company (Adnoc) aims to emerge as a “major player in the emerging blue hydrogen market”, with its abundant gas supplies placing it at the forefront of hydrogen initiatives in the Middle East.
The company is also exploring the potential of green hydrogen, which is made using renewable energy and free from carbon emissions, as blue hydrogen still has associated emissions.
Blue hydrogen is derived from natural gas feedstock, with the carbon dioxide by-product from hydrogen production captured and stored, however not all of the CO2 is able to be captured in the process.
Adnoc believes its existing gas infrastructure and commercial-scale carbon capture utilization and storage (CCUS) capabilities make it well-positioned for the opportunities in the hydrogen market.
Robin Mills, chief executive of Dubai-based consultancy Qamar Energy, said Middle East national oil companies have a clear competitive advantage in blue hydrogen, "and this is where Adnoc and Aramco have focussed most of their attention so far”.
“It fits well with existing assets, skills and business models,” he said.
The Middle East should be able to achieve the world’s lowest blue hydrogen production costs, just below those in Russia and the US, Mills added.
Ian Thom, research director with Wood Mackenzie, said the Middle East could become “a competitive producer of blue and green hydrogen with the availability of low-cost gas and an expanding solar capacity”.
Adnoc, along with compatriot Fertiglobe, recently sold cargoes of blue ammonia — made from nitrogen — to Japanese players amid an increased clean energy push in the emirate.
In May, Adnoc announced that it is progressing plans to build a large blue-ammonia project as it deepens the UAE’s exposure to emerging low-carbon fuel value chains.
The facility, which has moved to the design phase, will be developed at the new Ta’ziz industrial complex and chemicals hub at Ruwais, in the west of the country.
“The design contract for this project has already been awarded, with a final investment decision for the project expected in 2022, and start-up targeted for 2025,” the company said.
The facility is expected to have a capacity of 1 million tonnes per annum, with Fertiglobe joining Adnoc and ADQ as a partner in the project, subject to regulatory approvals.
UK supermajor BP, Adnoc and compatriot Masdar recently signed a trio of agreements aimed at developing low carbon hydrogen hubs, working on sustainable energy and mobility solutions for cities in the UK, the UAE and elsewhere.
The agreement could also potentially “lead to the first international investment in BP’s planned low carbon hydrogen facility in Teesside (H2Teesside, in the UK), which aims to produce 1 gigawatts of blue hydrogen starting in 2027.”
The H2Teesside facility aims to capture and store up to 2 million tonnes per annum of carbon dioxide.
Adnoc has also signed a number of agreements this year to explore hydrogen supply opportunities for key demand centres, including the Japanese Ministry of Economy, Trade & Industry and South Korea’s GS Energy.
An Adnoc spokesperson told Upstream that the company is “working with existing and new partners around the world to identify markets, map out value chains and develop a roadmap to create a hydrogen ecosystem”.
Adnoc signed an agreement earlier this year with Mubadala and ADQ to form a hydrogen alliance focusing on both green and blue hydrogen.
It forms part of Abu Dhabi's energy diversification plans as the emirate looks to establish itself as an exporter of hydrogen to emerging international markets, while also building a local hydrogen economy.
While green hydrogen will form part of the alliance's plans, Adnoc has stated that its main focus will be on blue hydrogen as it looks to leverage its significant gas reserves.
The company already produces about 300,000 tpa of hydrogen for its downstream operations and has previously stated it intends to expand it to more than 500,000 tpa.
Adnoc chief executive Sultan Ahmed al Jaber has said that he believes the UAE could become “one of the lowest-cost and largest producers of blue hydrogen in the world" utilising CCUS technology.
Last year, Adnoc revealed plans to expand its CCUS programme by more than 500%, to have capacity to capture 5 million tpa of CO2 by 2030.
The programme forms part of the company's sustainability goals to reduce its greenhouse gas intensity by 25% by 2030.