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Neom closes deal to finance $8.4bn hydrogen facility

The green hydrogen project is financed with $6.1 billion non-recourse financing from 23 local and global financial institutions

Neom Green Hydrogen Company (NGHC) has reached a financial close on the $8.4 billion green hydrogen production facility at Oxagon in the Neom megaproject.

It comes following the signing of agreements with 23 local, regional, and international banks and investment firms.

The company’s non-recourse financing structure for the project has been certified by S&P Global under the green loan framework. 

In addition, NGHC concluded the engineering, procurement, and construction (EPC) agreements with US-based Air Products as the nominated contractor and system integrator for the entire facility.

David R. Edmondson, chief executive officer of NGHC, said the agreements are worth $6.7 billion.

Air Products has already awarded major contracts to various technology and construction partners.

NGHC also secured an exclusive 30-year off-take agreement with Air Products for all the green ammonia produced at the facility.

An equal joint venture between Saudi-listed ACWA Power, Air Products and Neom, NGHC’s mega-plant will integrate up to 4GW of solar and wind energy to produce up to 600 tonnes per day of carbon-free hydrogen by the end of 2026 in the form of green ammonia. 

Seifi Ghasemi, chairman, president and CEO of Air Products, said that producing and exporting green ammonia supports the decarbonisation of heavy-duty transportation and industrial sectors and will result in saving about five million tonnes of carbon dioxide annually.

In January 2023, Saudi Arabia’s ministry of industry and mineral resources awarded its first industrial operating license to NGHC. 

At present, GCC countries currently use large quantities of natural gas-based grey hydrogen. The availability of low-cost natural gas, coupled with the ease of carbon capture, use and storage will allow for the cost-competitive production of blue hydrogen.

In August 2022, Abu Dhabi unveiled its hydrogen policy and regulatory framework as part of the UAE’s push to become a global force in the low-carbon economy.

At least 17 countries and the European Union have already developed hydrogen strategies, while about 20 other countries are presently formulating their policies. 

The International Renewable Energy Agency has forecast hydrogen to account for up to 12 percent of global energy use by 2050, leading to the rise of new energy superpowers.