The world has entered an era where hydrogen is being embraced as an alternative to traditional energy sources. Countries are engaged in a global race to produce and utilize hydrogen, aiming to enhance their energy security and align with the objectives of the Paris Climate Agreement for reducing greenhouse gas emissions. The Middle East and North Africa (MENA) stands out as crucial and favorable regions for hydrogen production, benefiting from ample sunlight and expansive wind gusts. Moreover, these regions enjoy advantageous proximity to major markets in Asia and Europe. Notably, Saudi Arabia and Oman have made significant strides in developing their hydrogen industries, leading the way in the Middle East.
Saudi aims to lead global hydrogen production by 2035
Aligned with Vision 2030 and aiming to decrease reliance on foreign currency oil exports, Saudi Arabia places significant emphasis on renewable energies and hydrogen. The country has set ambitious goals to become the largest global hydrogen producer, targeting an annual production of 2.9 million tons, which is projected to increase to 4 million tons by 2035.
When comparing these figures to China’s goal of producing 100,000 to 200,000 tons of hydrogen per year and Europe’s plan to produce 1 million tons annually, the Kingdom’s ambitious target in the hydrogen industry becomes evident.
Furthermore, Riyadh has long-term plans to emerge as the primary supplier of renewable energy-based hydrogen. Leveraging its significant potential in the solar and wind sectors, Saudi aims to enhance its electricity generation capacity from renewable sources.
Read more: Saudi’s hydrogen production presents tremendous opportunities
Natural gas use for hydrogen production in Saudi
With its abundant renewable energy potential and substantial natural gas reserves, Saudi is poised to become a significant producer of cost-effective green and blue hydrogen on a global scale.
Saudi Arabia possesses vast natural gas reserves, securing its position as the sixth-largest global producer in 2020, following Russia, Iran, Qatar, the United States (U.S.), and Turkmenistan.
According to a study commissioned by the King Abdullah Petroleum Studies and Research Center (KAPSARC), the estimated cost of producing blue and green hydrogen in Saudi Arabia is $1.34 and $2.16 per kilogram, respectively. These estimates are based on current domestic gas prices and the average auction price for renewable energy projects awarded in 2020.
The transportation cost of delivering hydrogen from Saudi Arabia to the port of Rotterdam, through the Suez Canal, will vary between $3.50 and $4.50 per kilogram. The specific cost within this range depends on the type of hydrogen carrier employed for transportation.
With a substantial investment of $110 billion in natural gas resources, the Kingdom seeks to meet a portion of its local electricity demand by establishing new power plants.
The abundant natural gas resources in Saudi will be utilized for hydrogen production. The Jafurah field, estimated to hold 200 trillion cubic feet of gas, is set to commence production in 2024, according to Saudi Aramco.
Saudi Arabia intends to export green hydrogen, which is typically generated from solar and wind energy sources. This type of hydrogen production boasts a significant advantage as it is free from carbon emissions throughout the process.
Hydrogen production via alternative energy in Saudi
During the previous summer, Saudi Arabia inaugurated the largest wind power plant in the region, renowned for generating the most affordable wind power globally.
With a modest investment of $500 million, the 400-megawatt plant was inaugurated. Featuring 99 turbines, the plant has the capacity to power approximately 70,000 homes with electricity.
The Dumat Al Jandal Wind Farm, developed through a partnership led by Électricité de France (EDF) Renewables and UAE’s Masdar, sets a new benchmark with a remarkably low cost of less than $20 per megawatt hour for electricity production.
Notably, there is a significant focus on green hydrogen production through electrolysis, where solar and wind energy play a crucial role in providing the power needed for electrolysis processes.
Hydrogen investments in Saudi
Oil-exporting Gulf States, such as Aramco and Abu Dhabi National Oil Company (ADNOC), are actively involved in the production of blue hydrogen as a means to introduce new forms of energy. Both companies are exploring the possibility of leveraging their existing business relationships with crude consumers to market and sell hydrogen.
During October 2021, Saudi Aramco unveiled its intentions to invest in blue hydrogen. The company expects the growth and maturation of the global hydrogen market to extend until the end of the decade.
In September 2021, Aramco, the largest oil company globally, successfully dispatched its inaugural shipment of blue ammonia to Japan. The pilot project aimed to showcase the feasibility of exporting this particular fuel.
In October 2023, Saudi Aramco announced its collaboration with Danish energy efficiency technology leader, Topsoe, to construct a low-carbon hydrogen pilot plant in the Shaybah region of Saudi Arabia. The plant will employ renewable electricity to refine hydrocarbon vapor, resulting in the production of low-carbon hydrogen. This hydrogen will be utilized for power generation, with the extraction and sequestration of the resulting CO2. The project, with a daily production capacity of six tons of hydrogen, will serve as a stepping stone towards a larger pilot plant capable of extracting approximately 1,250 tons of carbon dioxide per year.
World’s largest green hydrogen plant
NEOM Green Hydrogen Company, a partnership between ACWA Power, Air Products, and NEOM, has announced plans to establish the largest green hydrogen (green ammonia) plant on a global scale by 2026.
Successful funding agreements have been concluded for the green hydrogen production plant located in Oxagon, within Saudi’s NEOM region. The total investment value for the plant amounts to $8.4 billion.
Hydrogen trains in Saudi
In another significant development, Saudi Arabia Railways (SAR) revealed the initiation of its inaugural hydrogen train trials in the Kingdom during October. Through a partnership with the French company Alstom, SAR aims to conduct essential operational tests and studies to adapt this train type to Saudi’s environment and airspace. These efforts pave the way for its eventual deployment into service.
As a notable participant in the hydrogen sector, Saudi Arabia has not only joined the race but has also positioned itself at the forefront. The question remains: Will the Kingdom be able to accomplish its objectives in this field by 2035?
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