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Saudi-Japanese Feasibility Study for Producing Clean Hydrogen for Local, Int’l Markets

Saudi Arabia recently issued the first license in the “Oxagon” industrial city for the NEOM Green Hydrogen Company. (Asharq Al-Awsat)
Saudi Arabia recently issued the first license in the “Oxagon” industrial city for the NEOM Green Hydrogen Company. (Asharq Al-Awsat)
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Saudi-Japanese Feasibility Study for Producing Clean Hydrogen for Local, Int’l Markets

Saudi Arabia recently issued the first license in the “Oxagon” industrial city for the NEOM Green Hydrogen Company. (Asharq Al-Awsat)
Saudi Arabia recently issued the first license in the “Oxagon” industrial city for the NEOM Green Hydrogen Company. (Asharq Al-Awsat)

Japan’s Marubeni Corp. has agreed to study clean hydrogen production in Saudi Arabia together with the Kingdom’s sovereign Public Investment Fund (PIF).

Saudi Arabia, a leading oil-producing nation and a key player in the Organization of the Petroleum Exporting Countries, is looking to add other types of energy sources, including cleaner fuels and renewables, to diversify its economy.

According to Reuters, Marubeni and PIF, central to the Kingdom's goal to cut reliance on oil, agreed to conduct a feasibility study for producing clean hydrogen for both domestic and international markets.

In early February, Saudi Arabia’s Ministry of Industry and Mineral Resources issued the first industrial operating license for NEOM Green Hydrogen Company (NGHC) - an equal joint venture between NEOM, ACWA Power and Air Products.

This step came as part of NEOM’s efforts and its ambitious vision to develop innovative sustainable solutions to address key global challenges, the foremost of which is climate change.

When complete, NGHC will be the largest at-scale green hydrogen production company in the world based in Oxagon, home to advanced and clean industries in NEOM, with a next generation port and fully automated and integrated supply chain and logistics network.

It is expected that the NGHC plant will start producing green hydrogen from 100% renewable energy sources in 2026, with production of up to 1.2 million tons of green ammonia annually – a figure equivalent to 600 tons of green hydrogen per day.

In other news, Saudi oil giant, Aramco, signed a letter of intent to become a potential minority stakeholder in a new powertrain technology company (PWT), to be established by Geely and Renault Group. The new company will be dedicated to internal combustion and hybrid powertrain technologies.

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Oil Slumps More than 4% after Iran Downplays Israeli Strikes

Oil pump jacks work at sunset near Midland, Texas, US, August 21, 2019. REUTERS/Jessica Lutz/File Photo
Oil pump jacks work at sunset near Midland, Texas, US, August 21, 2019. REUTERS/Jessica Lutz/File Photo
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Oil Slumps More than 4% after Iran Downplays Israeli Strikes

Oil pump jacks work at sunset near Midland, Texas, US, August 21, 2019. REUTERS/Jessica Lutz/File Photo
Oil pump jacks work at sunset near Midland, Texas, US, August 21, 2019. REUTERS/Jessica Lutz/File Photo

Oil prices tumbled more than $3 a barrel on Monday after Israel's retaliatory strike on Iran over the weekend bypassed Tehran's oil and nuclear facilities and did not disrupt energy supplies, easing geopolitical tensions in the Middle East.
Both Brent and US West Texas Intermediate crude futures hit their lowest levels since Oct. 1 at the open. By 0750 GMT, Brent was at $72.92 a barrel, down $3.13, or 4.1%, while WTI slipped $3.15, or 4.4%, to $68.63 a barrel, Reuters said.
The benchmarks gained 4% last week in volatile trade as markets priced in uncertainty around the extent of Israel's response to the Iranian missile attack on Oct. 1 and the US election next month.
Scores of Israeli jets completed three waves of strikes before dawn on Saturday against missile factories and other sites near Tehran and in western Iran, in the latest exchange in the escalating conflict between the Middle Eastern rivals.
The geopolitical risk premium that had built in oil prices in anticipation of Israel's retaliatory attack came off, analysts said.
"The more limited nature of the strikes, including avoiding oil infrastructure, have raised hopes for a de-escalatory pathway, which has seen the risk premium come off a few dollars a barrel," Saul Kavonic, a Sydney-based energy analyst at MST Marquee, said.
"The market will be watching closely for confirmation Iran won't counter attack in the coming weeks, which could see the risk premium rise again."
Commonwealth Bank of Australia analyst Vivek Dhar expects market attention to turn to ceasefire talks between Israel and Iran-backed militant group Hamas that resumed over the weekend.
"Despite Israel’s choice of a low aggression response to Iran, we have doubts that Israel and Iran’s proxies (i.e. Hamas and Hezbollah) are on track for an enduring ceasefire," he said in a note.
Citi lowered its Brent price target in the next three months to $70 a barrel from $74, factoring in a lower risk premium in the near term, its analysts led by Max Layton said in a note.
Analyst Tim Evans at US-based Evans Energy said in a note: "We think this leaves the market at least somewhat undervalued, with some risk OPEC+ producers may push back the planned increase in output targets beyond December."
In October, the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, kept their oil output policy unchanged including a plan to start raising output from December. The group will meet on Dec. 1 ahead of a full meeting of OPEC+.