Saudi Aramco has outlined plans to invest in blue hydrogen as the world shifts away from non-clean energy sources, but stated that it will be at least until the end of this decade before a global market for clean fuel is developed. Ahmad Al-Khowaiter, head of technology at Aramco, said in an interview with Bloomberg Television today at the company's headquarters in Dhahran, eastern Saudi Arabia: "We will have a large share of the blue hydrogen market, and there will be no increase in production before 2030; we will not see large quantities of blue ammonia before then."
Hydrogen is regarded as crucial for slowing climate change because it does not emit harmful greenhouse gases when burned. The blue form of hydrogen fuel is derived from natural gas, with the carbon emissions from its conversion process being captured. Hydrogen is sometimes converted back to ammonia to facilitate easier transport between continents. Al-Khowaiter indicated that the state-owned energy company may spend around one billion dollars on carbon capture for every million tons of blue ammonia produced, excluding the cost of producing gas.
**Demand-Driven**
Aramco, the world's largest oil company, sent its first shipment of blue ammonia to Japan last September in a pilot project to demonstrate the feasibility of exporting the fuel. Al-Khowaiter stated that Aramco will decide on further shipments based on the level of demand. He declined to comment on the amount of gas Aramco plans to produce for its blue hydrogen expansion efforts or whether the company has abandoned its plans to produce liquefied natural gas.
The Kingdom had stated in 2019 that it aimed to double gas production to 23 billion cubic feet per day during this decade, with the additional supplies intended for local power plants to phase out oil operations, exporting the remainder via pipelines or as liquefied natural gas. While Aramco expects oil demand to remain high for years, if not decades, the company is preparing to develop new fuel types. Meanwhile, blue hydrogen is still in its infancy, and producing it at scale will take years due to the cost and potential associated with this technology.
**Long Cycle**
Al-Khowaiter mentioned that "Aramco" needs to secure agreements with buyers before blue hydrogen investments can proceed in earnest. He added: "When signing purchase agreements, you are looking at a capital cycle of five to six years to invest in production and conversion requirements," which is considered a long timeframe.
The company has not ruled out the production of green hydrogen, which is based on renewable energy generally generated from wind or solar power, leading to no carbon emissions. Air Products & Chemicals Inc., based in Pennsylvania, and Saudi Arabia’s ACWA Power are leading the Kingdom's efforts regarding green hydrogen, with a $5 billion plant currently being constructed for this purpose in NEOM, located in the northeastern part of the Kingdom.
Al-Khowaiter noted that Aramco is exploring synergies between the two types of hydrogen. However, he emphasized that the production costs of blue hydrogen may be about five times the costs of green hydrogen, at least at today’s solar and wind energy prices. Many analysts expect green hydrogen to become inexpensive, or possibly the cheapest, over the next decade.
