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About Commodity Insights
15 Mar 2022 | 15:03 UTC
Highlights
New entity venture between ADNOC, Taqa, Mubadala and Masdar
ADNOC looks to lower carbon footprint of blue ammonia plant
Abu Dhabi National Oil Company is aiming to formalize a joint venture for international and domestic investments in green hydrogen "by the end of the year", the vice president of the company's hydrogen business development division said on March 15.
"The process of shaping that joint venture, we expect that all the agreements will be in place soon. We have to wait for merger control, be given green light and I would expect that to be by the end of the year. Until then that we are going to move ahead independently," Marcus Guzmann told S&P Global Commodity Insights on the sidelines of a conference in Dubai.
The new entity will be a joint venture between key UAE state-backed entities including ADNOC, the Abu Dhabi National Energy Company, also known as Taqa, renewable energy company Masdar and Mubadala Investment Company.
The companies in December announced their intention to form a clean energy venture, with more than 50 GW of capacity installed by 2030. This comes as the UAE, OPEC's third-largest producer, accelerated its plans for energy transition.
The UAE became the first country in the Arab world to announce plans to reach net-zero emissions by 2050 ahead of the UN Climate Change Conference in Glasgow in 2021. Saudi Arabia, the world's largest oil exporter also announced plans to reach net-zero by 2060.
The UAE and Saudi Arabia have both announced targets that only apply to domestic emissions and do not impact carbon dioxide released from the burning of their crude and products overseas.
Hydrogen, a clean fuel, is being prioritized for development by oil-exporting countries of the Middle East, including the UAE and Saudi Arabia.
The emirates is putting together a hydrogen roadmap and in 2021 announced an alliance of state entities to push for investments in green and blue hydrogen.
Green hydrogen is manufactured through renewable-powered electrolysis, while blue hydrogen is the outcome of steam methane reformation of natural gas, with the fugitive carbon dioxide captured and sequestered.
ADNOC plans to scale up its blue hydrogen output from 300,000 mt/year to a production capacity of 500,000 mt/year. The company declined to comment on the timeline for increased production.
Fertiglobe, ADNOC's joint venture with Amsterdam-listed OCI, is developing a blue ammonia plant at the oil company's downstream hub in Ruwais.
When completed, it will have a production capacity of 1,000 kilotons/year.
Ammonia is a more easily transportable form of hydrogen.
The company will look to lower the carbon footprint of blue hydrogen and ammonia by capturing carbon dioxide released from various energy-intensive processes at Ruwais, Guzmann said.
"We should be more open minded and more flexible and we have the luxury in the sense that we have so many assets to decarbonize - 25% more than we have to do today. [If we can do] 5 million tons per year of carbon dioxide, then why not putting it onto the balance sheet of a hydrogen molecule," he added.
ADNOC's green hydrogen and renewables venture with other Abu Dhabi entities will look at mobilizing international supply chains and hubs for the clean fuel.
"We'll look at international investments, not just limited to the UAE, but also thinking of, let's say Australia as one example or northern Africa," Guzmann said.
"Actually with the core investment, we can entertain supply chains out of different regions into Europe, into Asia, which I think is opening up different pathways," he added.
The venture could look at installed capacity of as much as 100 GW by 2030 with "a fraction of that depending on market demand and market readiness" to be converted to hydrogen.