FII: Saudi Aramco looks to invest in green hydrogen

Saudi market officials monitor Aramco's share price on the kingdom's stock exchange. AP

Saudi Aramco, the world's largest exporter of oil, signed five preliminary agreements on Tuesday with various companies as it looks to explore the development of green hydrogen and ammonia.

The company will build a green hydrogen and ammonia project with the Modern Industrial Investment Holding Group and Intercontinental Energy.

The agreements were signed on the sidelines of the Future Investment Initiative forum being held in Riyadh.

Aramco did not offer more details on the development of the project. Green hydrogen refers to the clean fuel produced through electrolysis powered by renewable sources.

Saudi Arabia, which pledged to achieve carbon neutrality by 2060, is building one of the biggest green hydrogen projects in the world in Neom, the futuristic mega-city straddling the borders of Egypt and Jordan.

The $5 billion project has a 4-gigawatt capacity and can produce 650 tonnes of hydrogen per day.

Aramco has previously expressed interest in blue hydrogen, which is produced from natural gas, with the carbon captured and sequestered to lower emissions.

Gulf-based state oil exporters such as Aramco and the UAE's Adnoc are looking to develop blue hydrogen as they look to sell newer forms of energy.

Both countries are looking to use existing crude oil trading relationships with consumers to sell hydrogen.

Last year, Aramco shipped blue hydrogen produced in Saudi Arabia to Japan. The hydrogen was shipped in the form of the more easily transportable ammonia for use in zero-carbon power generation in Japan, one of its top importers of crude.

Earlier this year, Saudi Arabia expressed intentions of becoming the "next Germany" in renewables.

The kingdom's energy minister also floated the possibility of selling green hydrogen produced in the kingdom to Europe via pipeline "if the economics allow for it".

Hydrogen has become a popular alternative fuel among Gulf oil producers that are looking to diversify their energy sources.

Aramco also signed agreements with a number of companies on measures to lower energy impact and offset emissions.

Two separate agreements signed with South Pole Carbon Asset Management and Yousef Abdulrahman AlDhabyan Agricultural aim "to evaluate the feasibility of establishing a National Green Services Company to develop and innovate nature-based solutions that help reduce greenhouse gas emissions".

Aramco also signed agreements with BFG and ABB for the manufacture of non-metallic building materials and upstream digital technology, respectively.