Hydrogen Perspectives in Middle East: From Hype to Reality

The Hydrogen sphere and associated opportunities have been looked at in recent years. This trend has picked up pace in the last 12 months and the industry has seen a huge increase in the level of interest in the field.

This interest applies across the board, including public and private sectors, the policy makers, and project development strategies for companies looking at opportunities in hydrogen.
It is very important to have close collaboration between all sectors – clear regulations, adapting existing infrastructure, innovation and capital. The foundations need to be firmly in place.

Hydrogen as a key pillar of decarbonisation for the industry will unlock many opportunities. Energy consuming sectors which can adapt carbon-free energy are including but not limited to; power generation plants for electricity production, refineries, chemical production plants, steel and precious metals smelters, road transportation, shipping, aviation, mining industries and last but not least AC for residential and business buildings. These sectors will be able to use Hydrogen energy, directly or indirectly, in order to reduce their CO2 emissions.

Table 1: Hydrogen demand by sector in the NZE (IEA, 2021)

Reliable infrastructure and technologies are vital enablers for transforming the energy systems – And strong financial support will be needed to ensure the deployment of these key technologies and infrastructure.

Without greater international co‐operation, global CO2 emissions will not fall to net zero within the set timeframe. On a positive note, the technologies, either mature or recently developed, are already here and have gained strong momentum in the field.

In fact, the Middle East region has many advantages when we speak about existing production facilities. Blessed with low-cost hydrocarbons but also low-cost land, fantastic renewable energy resources, the region can really lead in the sense that it can be cost competitive on a global scale.

That, in the in the run-up to COP26, these commitments are now formulated, they're out there and provide the vision and strategy for people to act.

Table 2: Global production of hydrogen by fuel (IEA, 2021)

According to IEA 2021 report, the Middle East is considered to be the ‘cheapest region’ where Hydrogen from Natural Gas can be produced. Blue Hydrogen can then be exported from the Middle East to Europe or to Asia at a competitive price adapting alternative and innovative transportation methods.

There remains room for improvement in order to make Blue Hydrogen more sustainable and more ecologically friendly. Leaving aside ‘Grey’ Hydrogen, as it cannot be considered clean. The main areas that require further development are: reducing the current production, transportation and storage costs.

Hydrogen can be stored physically, either in gas or liquid phase. Today, hydrogen is primarily stored as a gas and this typically requires high-pressure tanks (350–700 bar tank pressure). Storage of hydrogen as a liquid requires cryogenic temperatures because the boiling point of Hydrogen at standard atmosphere pressure is −252.8°C. Hydrogen can also be stored under alternative forms.

Mature technologies are already available to produce and transport clean Hydrogen at a competitive price for Middle East. Currently, the available options to reduce production costs include:

• Retrofitting existing SMR to increase energy efficiency & adding CCS, both in CAPEX and OPEX reduction.
• Investing in new mega scale Hydrogen units with CCS, experiencing the so-called size effect.

In order to unlock the technology potentials for reducing transportation, conversion & reconversion costs, there are few available options (listed below):

• LOHC - Liquid Organic Hydrogen Carriers, using an organic molecule to carry safely Hydrogen on long distances, such as the Toluene Hydrogenation process. This option is convenient for importing countries in Europe and Asia, which already have existing infrastructure and capacities for reconversion.
  The LOHC route, which is when Hydrogen is reacted with Toluene to form Methylcyclohexane (MCH). MCH is a compound that can be transported at ambient temperature and pressure, and therefore can as a result definitely bring the cost of transportation down. Toluene Hydrogenation is a commercially available technology, low in terms of CAPEX and OPEX, for exporting Hydrogen. MCH dehydrogenation process can be implemented by revamping existing Catalytic Naphtha Reforming units – a low risk technology to import clean Hydrogen.
• Liquid Inorganic Hydrogen Carriers (LIHC) where Ammonia will be the key liquid form.
• Improving under and overground transmission pipeline networks.

Implementing the above technology routes should allow Middle Eastern producers to reduce clean H2 costs to below 2.3 $/Kg for export to the EU. The global market for storage materials and technologies should grow from $4.7 billion in 2021 to $6.8 billion by 2026, at a compound annual growth rate (CAGR) of 7.6% for the period of 2021-2026.

During the second and third quarters of 2021 there were a number of interesting and exciting announcements in relation to ‘Green’ Hydrogen – these included:

• Saudi Arabia pledging to reach net zero by 2060, without diminishing its position as the world’s leading oil producer.
  Crown Prince Mohammed bin Salman announced the investment of 700 billion riyals ($187 billion) in climate action this decade and stressed that Saudi Arabia would continue producing oil and gas. The targets would be achieved “while preserving and reinforcing the kingdom’s leading role in the security and stability of global energy markets, with the availability and maturity of required technologies to manage and reduce emissions.”
• SABIC moves low-carbon-emitting technologies initiative to the next level
  SABIC has entered an agreement with the World Economic Forum and other global chemical sector companies with the goal to formalise the Low-Carbon Emitting Technologies (LCET) initiative into a stand-alone entity by 2023. In collaboration, LCET members will share early-stage risks and co-invest in developing and upscaling low-carbon-emitting technologies.
• Saudi Aramco plans new green hydrogen & ammonia project
  State-controlled energy giant Saudi Aramco has signed an initial agreement to build a new green hydrogen and ammonia plant with Hong Kong-based green hydrogen developer InterContinental Energy.
• ADNOC to build world-scale Blue Ammonia project
  The project will accelerate ADNOC and UAE leadership in emerging low-carbon fuel value chains. Agreements are in place with customers to explore supply opportunities for blue hydrogen and hydrogen carrier fuels, such as blue ammonia. This builds on ADNOC's position as a leader in carbon capture and underground storage at Middle East’s first commercial CCUS facility at Al Reyadah. The plant will be located at the TA’ZIZ industrial ecosystem and chemicals hub in Ruwais, close to international markets.
• World’s Largest Green Hydrogen Project Unveiled in Saudi Arabia
  The $5 billion plant will be jointly owned by, Air Products, Saudi Arabia's ACWA Power and Neom, a new mega-city planned near Saudi Arabia’s borders with Egypt and Jordan. Once completed the facility will produce 650 tons of green hydrogen daily, enough to run around 20,000 hydrogen-fueled buses, according to Air Products. The fuel will be shipped as ammonia to global end markets and then converted back to hydrogen. Ammonia production is expected to start in 2025.
• Hyport Duqm Green H2 Project, Oman
  The aim of the project is to develop a green hydrogen plant in the Special Economic Zone at Duqm, Oman, in cooperation with the Public Authority for Special Economic Zones and Free Zones (OPAZ). The facility's electrolyser capacity is estimated between 250-500MW in the first phase of development.

Many Middle East countries are fully committed to achieving net zero, so how important are these announcements and developments in terms of achieving the full potential of a hydrogen driven economy?

The announcements are very important and are proof that the region is committed to become a global powerhouse for green electrons and green molecules. This is a confidence boost for the industry. Now in turn the industry needs to focus on developing strategies to ensure that the announcements, the big ambitions are on their way to become reality and as soon as possible.

As a conclusion and in order to unlock the full potential of the hydrogen driven economy, countries in the region must address four key enablers:

1. First, countries need to set a clear direction for all key stakeholders with integrated hydrogen strategies, including quantified targets and hydrogen-specific regulations and incentives.
2. Second, countries should develop hydrogen valleys to reduce production costs, attract additional investment and support the ecosystem development.
3. Third, GCC countries must develop international partnerships with key technology providers to gather and develop the required knowledge to build leadership in hydrogen.
4. Last but not least, policy makers must enhance the university & training programs and sector specific trainings to prepare the qualified workforce needed to deploy the hydrogen economy across its wide value chain.

The world needs energy and at the same time energy companies need to control and reduce emissions. In a nutshell, there is a great opportunity for the region to take a leading role in supplying clean energy across the world. Not just to the developed countries, but to the developing countries as well, in an equitable manner. This in parallel with emissions control, developing and accelerating the Hydrogen economy, will help the energy industry to decarbonise the hard to abate sectors.

This major topic will be a main focus at Euro Petroleum Consultants’ upcoming ESF - Energy Sustainability Forum series, with strong focus and commitment to the MENA region.