Riyadh – Sharikat Mubasher: Saudi Arabia is preparing to make a multibillion-dollar bet on hydrogen and will launch a new company to produce the much-hyped low-carbon fuel, according to people familiar with the matter.
The kingdom’s sovereign wealth fund, chaired by Crown Prince Mohammed bin Salman, has created a company called Energy Solutions Co. to finance so-called green hydrogen power production, Bloomberg reported quoting this source who asked not to be identified as the information is private.
The Public Investment Fund (PIF) expects the firm to invest at least $10 billion, the source said, though that number could grow significantly in years to come depending on demand for hydrogen and its investment pipeline. Some investments will be made with state oil producer Saudi Aramco, they said.
The newly created company, which is expected to be helmed by former ThyssenKrupp Uhde chief executive officer Cord Landsmann, could be formally announced as soon as this month, the people said. It would be controlled and funded by the Public Investment Fund, the powerful sovereign investor driving many of Saudi Arabia’s economic diversification efforts.
Representatives for the PIF declined to comment.
Saudi Arabia is aiming to become one of the world’s biggest producers of hydrogen — a fuel that burns without releasing carbon — as it looks to reduce its reliance on oil sales while remaining a global energy supplier.
The ‘green’ variety of the fuel is made from just water and renewable power and poses an attractive solution for countries wanting to reduce emissions from energy-intensive industries that can’t easily run on electricity, such as metals manufacturing and aviation.
But producing green hydrogen is enormously expensive and its detractors point to the huge costs and time required to build infrastructure in importing countries. It’s also tricky to transport safely. Few potential buyers are therefore willing to sign long-term contracts to receive the fuel and many planned projects have stalled as a result.
Saudi Arabia is home to one of the few large-scale green hydrogen projects in the world to start construction. One of the $8 billion project’s equity partners agreed to buy its full output, clearing a major hurdle for the plans. Aramco has said it wants to invest in making blue hydrogen, produced using fossil fuels with emissions from the process captured and stored to prevent them from going into the atmosphere.
As governments and industries seek less-polluting alternatives to hydrocarbons, the world’s biggest crude exporter doesn’t want to cede the burgeoning hydrogen business to China, Europe, or Australia and lose a potentially massive source of income.
