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Energy security at centre of EU-GCC collaboration

Saudi Arabia's Crown Prince Mohammed bin Salman waves during the joint EU-GCC summit in Brussels, Belgium Reuters/Johanna Geron
Saudi Arabia's Crown Prince Mohammed bin Salman waves during the joint EU-GCC summit in Brussels, Belgium
  • GCC ‘more important’ than US
  • Hydrogen and LNG top agenda
  • Replacement for Russian gas

The European Union and the GCC held their first summit this week, where they committed to “greater cooperation on energy security, including energy efficiency and renewable energies and hydrogen”, the parties said in a joint statement.

The EU wants to strengthen its energy security by cementing ties with the GCC, following European states’ decision to cut dependence on Russian gas imports since Moscow’s invasion of Ukraine.

The states have also underlined the EU-Opec dialogue’s importance in stabilising energy markets, reducing volatility and “enhancing the security of energy supply”.

Christof Van Agt, director of energy dialogue at the International Energy Forum, told AGBI: “Energy security has always been an important part of the relationship between Europe and the wider Mena region, and the recent geo-economic shifts have made this even more important.”

The EU was heavily dependent on Russian fossil fuels, which accounted for around 40 percent of the EU’s natural gas and 27 percent of its oil in 2021.

But in the wake of Russia’s invasion of Ukraine, it has shifted its supplies towards countries including the GCC.

As a result, Saudi crude exports to Europe reached around 600,000 barrels per day on average in 2022.

In 2022, the EU’s imports of oil from the GCC combined exceeded $66 billion, up from $25 billion the previous year

To replace imports of natural gas from Russia, Europe turned to liquefied natural gas (LNG). For example, it imported 15 million tonnes of LNG from Qatar last year, nearly 20 percent of Qatar’s LNG production.

Fuels and mining products accounted for over 82 percent of European exports from the Gulf in 2023.  

The EU is also trying to fast-track green-energy transition and secure future supplies of renewable fuels, including hydrogen – an area in which the Gulf countries invest heavily. 

Spyros Kouvelis, team leader of EU-GCC cooperation on the green transition project, said that the very abrupt changes happening in global markets, especially the end of Russian gas flows to Europe, was one of the main reasons for the EU to look for new allies for its energy security and energy transition.

“North Africa is important, the US is a historical partner in energy, but the GCC has become even more important,” said Kouvelis.

“Europe is looking at this region to secure a long-term collaboration for the production and export of hydrogen to Europe,” he added.

Van Agt believes the region can potentially enable the EU to transform its energy systems into more sustainable ones.

“We need to have a comprehensive approach to energy transition that goes beyond renewables alone,” he said. “This region is a powerhouse in renewables, but we also need to focus on clean technologies such as carbon utilisation and storage; we need to develop hydrogen.” 

The GCC aims to leverage its abundant renewable energy sources, particularly solar and wind power, to become a leader in clean hydrogen.

In Saudi Arabia, Neom is building a facility to produce up to 600 tonnes of carbon-free hydrogen daily. More recently, the Public Investment Fund established a new entity, the Energy Solution Company, to invest around $10 billion in green hydrogen.

Oman aims to produce up to 1.5 million tonnes of green hydrogen by 2030.

However, industry experts believe that the development of clean hydrogen faces many challenges. 

“There is still a lot of regulatory uncertainty that needs to be eased,” said Van Agt. “There are infrastructure constraints also, forming market hurdles for these projects to really progress, issues with permitting, access to grids and grids themselves are often congested.”

Kouvelis, who runs one of the EU projects to develop collaboration between the GCC and the EU, said that the GCC producers request a better understanding of EU regulations “to agree on how to produce green hydrogen”.

“Europe has specific requirements on what it takes to produce renewable hydrogen, so you need to have a specific way to establish your renewable energy for producing it,” said Kouvelis.

He added that some developers in the region are “a little bit unhappy about how stringent this regulation is. It is stringent, but it’s very clear, and Europe is one of the most trusted and stable hydrogen market partners.”

The hydrogen rainbow

  • Green hydrogen is produced on a carbon-neutral basis through water electrolysis. 
  • Turquoise hydrogen is created when natural gas is broken down into hydrogen and solid carbon with the help of methane pyrolysis.
  • Blue hydrogen is generated from the steam reduction of natural gas. 
  • Grey hydrogen is obtained by steam reforming fossil fuels such as natural gas or coal. 
  • Sometimes other colours are ascribed to hydrogen, based on how it is produced. For red, pink and violet hydrogen, the electrolysers are driven by nuclear power. 
  • Yellow hydrogen is hydrogen produced from a mixture of renewable energies and fossil fuels. 
  • White hydrogen is a waste product of other chemical processes, while the use of coal as a fuel produces brown hydrogen.

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