Oil-rich Abu Dhabi targets hydrogen as future export fuel

Adnoc will independently develop blue hydrogen.
Adnoc will independently develop blue hydrogen.PHOTO: REUTERS

DUBAI (BLOOMBERG) - Abu Dhabi's government-run oil company is teaming up with two of its sovereign wealth funds to turn the petroleum-rich emirate into an exporter of blue and green hydrogen.

Abu Dhabi National Oil Co (Adnoc) formed an alliance with Mubadala Investment Co and ADQ to produce hydrogen from renewable energy, known as green hydrogen, ADQ said in a statement.

Adnoc will independently develop blue hydrogen, which is produced from natural gas in a process that captures emissions of carbon dioxide.

In a related deal, Abu Dhabi Future Energy Co, also known as Masdar, agreed with Siemens Energy to develop a facility to make green hydrogen at Masdar City in Abu Dhabi, Mubadala said in a statement.

Munich-based Siemens Energy is already building a hydrogen demonstration plant at the Mohammed bin Rashid Al Maktoum Solar Park in the neighbouring emirate of Dubai.

Abu Dhabi, the capital and largest sheikhdom in the United Arab Emirates, will market both versions of the fuel overseas and at home.

Some Middle Eastern states that built their fortunes on oil are seeking to develop hydrogen as fuel, given a shift among some of their buyers towards less-polluting alternatives to crude.

Saudi Arabia's energy minister has said he wants the kingdom - the world's biggest oil exporter - to become the largest shipper of hydrogen.

Abu Dhabi, like Saudi Arabia, produces natural gas, which it could use to develop blue hydrogen.

It also has ample sunshine, which can be harnessed to make green hydrogen.

However, the technology is expensive, and both blue and green hydrogen have yet to become cost-competitive with fossil fuels.

Adnoc produces around 300,000 tons of hydrogen annually for its downstream operations, and it intends to expand output to more than 500,000 tons, according to a statement. It is "well-placed to build on its advantaged position as a major natural-gas reserves holder and producer", according to ADQ.