Saudi Aramco has taken a significant step towards bolstering its hydrogen ambitions by signing final agreements to acquire 50% of Air Products Qudra’s (APQ) blue hydrogen industrial gases business.
This acquisition aligns with Saudi Arabia’s broader strategy to become a leading hydrogen producer. While the financial terms of the deal were not disclosed, the agreement includes options for the purchase of hydrogen and nitrogen.
Saudi Arabia, along with its neighboring countries, is heavily investing in hydrogen, aiming to position itself as a major player in the future energy landscape. The kingdom’s ambitions were clearly articulated in 2021 by Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud, who declared the nation’s goal to become the world’s largest supplier of hydrogen. This move by Aramco is part of a broader regional push to invest billions of dollars into hydrogen technologies.
Blue hydrogen is produced using natural gas with carbon capture and storage (CCS) to mitigate CO2 emissions. It is seen as a transitional technology towards green hydrogen, which is produced using renewable energy sources. Aramco’s acquisition of APQ’s blue hydrogen business suggests a pragmatic approach to leverage existing natural gas resources while progressing towards cleaner energy solutions.
Countries worldwide are investing heavily in hydrogen, yet the technological and infrastructural readiness varies significantly. For instance, Europe and Japan have made substantial strides in developing hydrogen infrastructure and supportive policies. Aramco’s investment must be viewed in this global context, where the success of hydrogen projects often depends on government support, technological innovation, and market readiness.
From an environmental perspective, blue hydrogen represents a step towards reducing carbon emissions compared to traditional fossil fuels. However, it is not entirely free from environmental concerns. The process still involves natural gas extraction and relies on the efficacy of carbon capture technologies. Economically, the future competitiveness of blue hydrogen hinges on global energy prices and the development of CCS technologies.
Aramco’s foray into blue hydrogen through this acquisition underscores its strategic intent to diversify and future-proof its energy portfolio. This move aligns with Saudi Vision 2030, which aims to reduce the kingdom’s dependence on oil revenues and transition towards more sustainable energy sources. However, the real test will be in scaling these technologies, achieving cost reductions, and transitioning towards green hydrogen.
