Saudi Arabia’s Public Investment Fund invests in clean hydrogen

The International Energy Agency (IEA) estimates attaining net-zero targets by 2050 will require 520 million tonnes of hydrogen. This requires lots of equipment and electrolysers.

Marubeni Company and Saudi Arabia’s Public Investment Fund (PIF) inked an MoU on March 1, 2023, to construct a clean hydrogen project. Marubeni and PIF will perform a feasibility study to produce clean hydrogen in Saudi Arabia for domestic and international markets under this MoU. Electrolyzers using renewable energy produce green hydrogen. Water is electrolyzed into hydrogen and oxygen to remove it. Natural gas produces blue and grey hydrogen. PIF is helping Saudi Arabia reform and diversify its economy and reach its net-zero GHG emissions objective by 2060 through developing initiatives.

Marubeni owns four Saudi Arabian IPP and IWP projects. It will work with PIF on this Project using its business development and operations in Saudi Arabia. Marubeni’s Mid-Term Management Strategy “GC2024” outlined its Green Strategy in February 2022.

NEOM

In Saudi Arabia’s smart metropolis NEOM, PIF-owned ACWA Power is building a green hydrogen-based ammonia factory. ACWA Power secured funding arrangements for the US$8.5 billion NEOM Green Hydrogen Project (NGHP) in late February 2023. It is projected to be commissioned in 2026.

ACWA Power owns 33.3% of NEOM Green Hydrogen Company (NGHC), a joint venture between ACWA Power, Air Products and Chemicals, and NEOM Company, who funded the investment with long-term debt and equity.

Senior loan of US$5.852 billion and mezzanine debt of US$475 million, both non-recourse project finance, make up the entire financing: US$1.5 billion from NDF for National Infrastructure Fund (NIF). Saudi Industrial Development Fund provides 1.25 billion Saudi riyals (SIDF). A syndicate of financiers provided the remainder in long-term uncovered and Euler Hermes covered tranches. HSBC, Standard Chartered Bank, Mitsubishi UFJ Financial Group, BNP Paribas, Abu Dhabi Commercial Bank, Natixis, Saudi British Bank, Sumitomo Mitsui Banking Corporation, Saudi National Bank, KfW, Riyad Bank, Norinchukin Bank, Mizuho Bank, Banque Saudi Fransi, Alinma Bank, APICORP, JP Morgan, DZ Bank, Korea Development Bank, and Credit Agricole are the financiers.

Under a 30-year green ammonia offtake deal with Air Products, NGHP builds and operates a multi-billion-dollar green hydrogen and green ammonia factory in the NEOM region of Saudi Arabia. ACWA Power inked a $5 billion agreement with Air Products and NEOM to build a green hydrogen-based ammonia production center in NEOM in 2020. ACWA Power, Air Products, and OQ energy created a multibillion-dollar green hydrogen-based ammonia production complex in Salalah Free Zone in 2022.

Jazan

Air Products announced the financial close and transfer of the second group of assets for the US$12 billion gasification and power joint venture with Saudi Aramco, ACWA Power, and Air Products Qudra in Jazan Economic City, Saudi Arabia, on January 19, 2023. On October 27, 2021, the first phase cost US$7 billion, and on January 19, 2023, the second cost US$4.15 billion. The joint venture bought this second group of Jazan assets after successfully acquiring and financing the first group in late October 2021. Later this year, minor commissioning tasks will be finished. Air Products invested US$1.6 billion in Jazan Integrated Gasification and Power Plant on October 27, 2021. (JIGPC). Air Products invested US$ 1.6 billion, including US$ 130 million from the non-controlling partner, in shareholder loans that qualify as in-substance common equity in the joint venture.

The JV’s capital structure is 40% member contributions and 60% non-recourse project financing. Saudi Aramco’s Jazan Refinery, a megaproject to process 400,000 barrels of crude oil per day, uses the joint venture to manufacture ultra-light sulfur diesel, gasoline, and other products. Saudi Aramco Power Company owns 20% of the JV, Air Products 46%, ACWA Power 25%, and Air Products Qudra (a 51/49 JV between Air Products and Qudra Energy) 9%. Air Products Qudra owns 4.6% and direct ownership 46%.

POSCO

PIF inked an MoU with POSCO and Samsung C&T to construct an export-oriented green hydrogen project in 2022. In 2015, PIF bought 38% of POSCO affiliate POSCO E&C. POSCO is the sixth-largest steelmaker. POSCO pledged to invest US$28 billion in green hydrogen and US$12 billion in “green” steel with Australian partners by 2040 on December 7, 2022.

Ajlan & Bros for Trading

On January 19, 2023, Marubeni Corporation, Ajlan & Bros for Trade (Ajlan Holding Group), and United District Energy International formed a joint venture to enter the Saudi district cooling sector. District cooling pipes chilled water from a central plant to various buildings. Consolidating cooling facilities and boosting their capacity can save energy use and maximize floor space.

Chile

Gasvalpo, a Chilean gas distribution and retail company owned by Marubeni, started a trial project in November 2022 to produce green hydrogen, inject it into a natural gas infrastructure, and distribute it to clients. Coquimbo Province in Chile hosts the project.

Malaysia

POSCO Holdings, Samsung Engineering, Lotte Chemical, Malaysian Sarawak Economic Development Corporation Energy, and Sarawak Energy will collaborate on Sarawak’s green H2 business. POSCO Holdings, Samsung Engineering, Lotte Chemical, Sarawak Economic Development Corporation Energy, and Malaysian Sarawak Energy signed an MoU on September 7 to offer hydroelectric-based renewable power for the Malaysia Sarawak H2biscus Green Hydrogen Project. Sarawak will create 200,000 tons of green hydrogen. Ammonia will transport all H2 to South Korea except for 7,000 tons utilized in Malaysia.

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