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$3.5bn Saudi-Egyptian project powers up hydrogen transition

The green ammonia facility in Egypt will use renewable energy sources and produce 500,000 tons of green ammonia from 100,000 tons of green hydrogen per year
  • Gulf aims to become a key hydrogen exporter
  • Hydrogen market is growing 9.2% through 2030
  • GCC green hydrogen could create 1m jobs by 2050

Saudi Arabia has backed up its ambition to become the world’s largest exporter of hydrogen by 2030 with plans to develop a $3.5 billion project in Egypt.

Riyadh-based Alfanar has signed a memorandum of understanding with the General Authority of the Suez Canal Economic Zone, the Sovereign Fund of Egypt, the Egyptian Electricity Transmission Company and the New and Renewable Energy Authority.

The green ammonia facility in Sokhna, 120km east of Cairo, will use renewable energy sources and produce 500,000 tons of green ammonia from 100,000 tons of green hydrogen per year.

In line with the Middle East Green Initiative launched by Saudi Crown Prince Mohammed Bin Salman, the project is part of Alfanar’s mission to pioneer the energy transition industry.

Sabah Al-Mutlaq, chairman of Alfanar Global Development, said: “We have enjoyed a long-standing relationship with Egypt and are thrilled to partner with such esteemed organisations of national importance on this programme. 

“Through this agreement, we will be developing a project to produce green hydrogen and green ammonia.”

Alfanar was one of the first companies to operate a 50mw solar project in the Benban Solar Park in the Aswan region of Egypt. The electricity generated from this solar plant currently offsets around 57,000 tons of carbon dioxide emissions per year.

Alfanar also has ambitious renewable energy projects across Saudi Arabia, the UK, Spain, India and Egypt. It is currently developing a project to produce aviation fuel from waste in the UK.

The Gulf region aims to become a key player in the global hydrogen production industry.

According to the World Bank, the market for the gas was valued at $130bn last year, and is estimated to grow by up to 9.2 percent per year through 2030.

Saudi Arabia and Egypt agree to develop a $3.5bn project in Sokhna, 120km east of Cairo

New energy superpowers

Hydrogen could account for up to 12 percent of global energy use by 2050, leading to the rise of new energy superpowers, according to a report from the International Renewable Energy Agency.

Earlier this year, the NEOM Green Hydrogen Project was announced as the world’s largest utility scale, commercially-based hydrogen facility powered entirely by renewable energy.

When commissioned in 2026, the joint venture between NEOM, Saudi Arabia’s $500bn city of the future, Air Products and ACWA Power will produce 650 tons per day of hydrogen by electrolysis. 

The finished project will mitigate the impact of three million tons of carbon dioxide per year. 

It will be the first of its kind to produce green hydrogen at a level that can be sold, according to Alicia Eastman, co-founder and managing director at Intercontinental Energy, who spoke at a virtual conference during the MENA Energy Week.

The UAE, Saudi Arabia and Qatar all score strongly in Fitch’s Hydrogen Suitability Index.

Water, Building, Refinery
Green ammonia facility in Sokhna in Egypt

Exports

Saudi Arabia has said it wants to become the world’s largest exporter of hydrogen by 2030, while Fitch is currently tracking six major commercial green and blue hydrogen and ammonia projects in the UAE. 

Fitch Solutions associate director of energy research, Thomas van Lanschot, said: “The MENA region exhibits robust overall potential for the development of hydrogen infrastructure in the long term.

“Growing global demand for low-carbon fuels begins to offer a strong basis for diversification to support non-oil economic activity in the region.”

In November, the UAE announced the Hydrogen Leadership Roadmap, a national blueprint to support domestic, low carbon industries to contribute to the country’s net zero 2050 ambition and establish the country as a competitive exporter of hydrogen. 

The country will target a 25 percent market share in key export markets, including Japan, South Korea, Germany, and India initially, along with additional high-potential markets in Europe and East Asia.

While Saudi Arabia is initiating major undertakings with no formal framework, Oman is creating new structures and introducing various projects, Qatar is continuing to focus on liquified natural gas and blue hydrogen production abroad, and Kuwait and Bahrain remain cautious and are sticking to investments and feasibility studies.

Earlier this month, Abu Dhabi unveiled its hydrogen policy and regulatory framework – part of the UAE’s push to become a global force in the low carbon economy.

Annual revenues from green hydrogen in the GCC are estimated to grow to about $200bn by 2050, generating up to one million jobs within three decades.

According to a Hydrogen Council report published last year, more than 30 countries have released hydrogen roadmaps, and the industry has announced more than 200 projects and ambitious investment plans. 

Total investments could exceed $300bn to 2030 – the equivalent of 1.4 percent of global energy funding.

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