Saudi oil major Aramco is putting its ambitious blue hydrogen plans on hold due to the high costs involved and the lack of off-takers, CEO Amin Nasser told analysts on Tuesday.
Even though Aramco has already sent shipments of blue hydrogen (in the form of blue ammonia) to both Japan and South Korea, Nasser said that developing its blue hydrogen programme has been “very expensive” because of which the company has not been able to secure any long-term off-take agreements for the clean fuel.
“It’s a lot of capital and you need customers. So we will not sanction a project without securing an off-take agreement,” he explained.
Nasser told analysts that blue hydrogen could cost three times more than the current Brent spot price.
“Even the customers in Japan and Korea [which are planning massive hydrogen economies] are waiting for government incentives. Until they get these incentives, it’ll be costly for them to pursue that blue hydrogen,” Aramco’s chief added.
The state-owned giant wants to spend billions of dollars on exploiting its huge untapped Jafurah sour-gas field to meet rising domestic demand for gas and then convert the remaining gas into blue hydrogen for export.
According to an announcement in June 2022, Aramco planned to produce 11 million tonnes of blue ammonia by 2030—produced from about two million tonnes of blue hydrogen.
But due to the difficulty in finding off-takers for blue hydrogen, the company is now considering exporting LNG instead, which might make more sense in light of Western countries’ determination to wean themselves off Russian gas.
