Malaysia's national energy company Petronas and Eneos of Japan are teaming up on studies for a commercial hydrogen production and conversion project in Kerteh, Terengganu, Peninsular Malaysia.

Under the joint feasibility study agreement (JFSA), the duo will pursue detailed technical and commercial studies for the production of low carbon hydrogen from Petronas’ existing facilities, production of green hydrogen from a new hydro-powered electrolyser facility, and hydrogen conversion into methylcyclohexane (MCH).

The facilities are projected to have a total hydrogen production and conversion capacity of up to 50,000 tonnes per annum by 2027 for export in MCH form to Japan, where the clean hydrogen will be distributed to Japanese industries through Eneos’ refineries.

Once operational, the project could potentially be the first commercial scale hydrogen-to-MCH undertaking in the world, claimed Petronas.

The final investment decision is expected by the end of 2023.

Through Eneos, this hydrogen-to-MCH project has been selected as one of the Green Innovation Fund projects by the Japanese Government, a testament to the project's viability and competitiveness which is a critical aspect in the development of the nascent clean hydrogen supply chain.

The 2 trillion yen (US$17.17 billion) funding was introduced to support green research and development projects as well as facility developments to propel Japan’s ambitious decarbonisation plans, which include achieving the 3 million tpa clean hydrogen demand target by 2030.

The JFSA is part of the long-term memorandum of understanding signed last August for the development of a clean hydrogen supply chain between Malaysia and Japan.

Along with this project and as part of the scope of collaboration under the MoU, Petronas and Eneos are exploring other hydrogen projects and technology opportunities, both domestically and internationally.

This collaboration is intended to develop a competitive hydrogen supply chain which is a crucial element for both parties’ decarbonisation agenda, noted Petronas.

The Malaysian company on Friday said that it continues to strengthen its position in hydrogen following its venture into this space at the end of 2020.

Since then, it has entered into several strategic partnerships with international and domestic players to grow its hydrogen production capabilities and delivery networks, covering low-carbon and green hydrogen.

Petronas recently announced that it will set up a new, independent entity focused fully on cleaner energy solutions and will capture opportunities in the energy transition alongside its core portfolio.

The entity — yet to be formally titled — will provide customers with lower carbon solutions through three initial core offerings of renewables, hydrogen and green mobility.