Nordic Electrofuel expands e-SAF plans to Middle East

: E-fuels, Hydrogen
24/12/18

Norwegian firm Nordic Electrofuel is expanding its plans to produce renewable hydrogen-based sustainable aviation fuels (e-SAF) to the Middle East, and has struck preliminary deals for plant developments in Saudi Arabia and Oman.

The Saudi plans have been approved by the government, with land set aside for the e-SAF plant and the associated solar photovoltaic (PV) assets in the Jubail region, Nordic Electrofuel's chief executive Gunnar Holen told Argus.

The plant could produce 350mn l/yr, or around 300,000 t/yr, of e-SAF, Holen said. This makes it one of the largest facilities planned globally and Holen said the plant could be operational by 2029 if its development is "fast-tracked". The size of the potential plant in Oman has yet to be decided, he said.

In Saudi Arabia, Nordic Electrofuel plans to produce the renewable hydrogen itself, although the solar PV assets would be developed by partners, Holen said. In Oman, the company might look to buy hydrogen from other projects. Oman has drawn strong interest from would-be hydrogen project developers, and state-owned Hydrom recently announced a third auction for plots of land, having already allocated eight. Some of these developers are bound to be looking for potential offtakers, Holen said.

In both countries, Nordic Electrofuel expects to benefit from low renewable power costs driven by highly favourable conditions for solar and wind generation. Power supply could be available at around $20/MWh, according to Holen.

Nordic Electrofuel is primarily targeting its offtake at regional airlines. This means its e-SAF will not be dependent on access to biogenic CO2, which would be required for compliance with the EU's definition of renewable fuels of non-biological origin and associated mandates, such as under the ReFuelEU Aviation legislation.

The firm intends to initially use CO2 captured from industrial installations for its Middle Eastern sites. But Holen said it could be possible to secure biogenic CO2 at a later stage, even though supply is not as abundant as in parts of Europe and other regions. In the long term, direct air capture could provide another source of CO2, although this will depend on the technology's further development.

Few e-SAF facilities have been announced in the Middle East, with most plans concentrated on Europe where the ReFuelEU Aviation mandates are expected to drive uptake. But some companies from the region, such as UAE-based renewables firm Masdar, have argued e-SAF is an attractive proposition.

In Norway, Nordic Electrofuel is developing a pilot plant in Heroya. The company aims to take a final investment decision on this by the third quarter of 2025, Holen said. The plant is due for commissioning in 2027 with a capacity of 10mn l/yr, which the company aims to ramp up in subsequent stages. Nordic Electrofuel has signed a binding term sheet for offtake from the Norwegian facility, Holen said.

By Stefan Krumpelmann

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

24/12/18

Viewpoint: Japan eyes methanol as marine bridging fuel

Tokyo, 18 December (Argus) — Japanese demand for methanol as an alternative marine fuel is expected to increase, especially after 2027, but it is likely it will mainly be used as a transition fuel before the commercial launch of ammonia- and hydrogen-fuelled vessels. The Japanese shipping industry is expected to launch more methanol-fuelled vessels from 2027 ( see table ), to help reduce greenhouse gas (GHG) emissions from the global maritime sector. Global regulatory body the International Maritime Organization (IMO) in 2023 pledged to achieve net zero emissions in international waters by or around 2050. To help achieve the IMO's target, a total of 26 methanol-powered vessels are expected to be commissioned worldwide by the end of this year, followed by 54 ships in 2025 and 96 carriers in 2026, according to a report released in November by Japanese classification society ClassNK. This would increase global methanol demand to 4.5mn t/yr by 2026, said the report. As of June, there are 33 methanol-fuelled vessels currently in use. Methanol-fuelled vessels can refuel at around 130 major ports all over the world, except in Japan, according to Japanese shipowner Mitsui OSK Lines (Mol). The city of Yokohama in the eastern prefecture of Kanagawa, in co-operation with Mitsubishi Gas Chemical (MGC) and Maersk, launched a study on methanol and green methanol bunkering in the port of Yokohama in December 2023. Since then, the group, in collaboration with new partners — Japanese refiner Idemitsu, MGC's shipping subsidiary Kokuka Sangyo, domestic shipping firm Uyeno Transtech and Yokohama Kawasaki international port — has conducted a ship-to-ship bunkering simulation at the port of Yokohama in September. Expectations of the increase in methanol use, especially cleaner e-methanol, have led Japanese firms to become more involved in upstream projects to secure the fuel. Japanese firms have invested in more than 10 e-methanol production projects both in and outside of Japan ( see table ), with the number of projects likely to increase, according to the ministry of economy, trade and industry. Japanese firms are developing new carriers, but at the same time are also trying to modify existing vessels — which currently use fuel oil, LNG, LPG and methanol — to be able to burn renewable fuels such as biofuels, e-methane and e-methanol. It would be easy to increase the number of methanol-fuelled ships, given their relatively low initial or modification costs compared with LNG-fed vessels, according to Mol. Methanol is also a stable liquid at room temperature and atmosphere pressure, making it easy to transport and store compared to other alternative fuels, Mol added. Fellow shipping company Nippon Yusen Kaisha (NYK line) is also mulling the development of smaller methanol-fuelled handymax ships that are unable to be equipped with large ammonia fuel tanks, to aid with decarbonisation. Methanol a temporary solution But Japanese firms see methanol mostly as a "bridging fuel" rather than a zero-emission fuel, as methanol can reduce GHG emissions only by 15pc compared to traditional bunker fuel, although it can curb sulphur oxide and nitrogen oxide emissions by up to 99pc and 80pc, respectively. It would be vital to begin introducing much cleaner marine fuels, such as ammonia and hydrogen, to meet the maritime sector's net-zero goal. Tokyo is trying to promote the development of ammonia and hydrogen-fuelled ships by providing financial support, while the utilisation of such clean vessels could materialise from around 2030, the ministry of land, infrastructure, transport and tourism (Mlit) said. Japan's state-owned research institute Nedo plans to provide ¥35bn ($229mn) to support the development of engines, fuel tanks, fuel supply systems and other core technologies for zero-emission ships that use hydrogen and ammonia, as well as LNG and e-methane, under its ¥2.76 trillion green innovation fund. But the grants are much larger than those for the development of methanol-fuelled ships, which are currently available only from Mlit and the environment ministry, with the amount of ¥100mn per vessel over two to three years. The scheme has been open for application every year since 2023. But the ministries' scheme also targets LNG-fuelled ships, with a breakdown of allotment for methanol-powered vessels unclear. By Reina Maeda and Nanami Oki Japanese firms' methanol projects Methanol-fuelled ships Company # of vessel Type Target commercialisation Announcement Mitsubishi Gas Chemical, Mitsui OSK Line 1 Ocean-going methanol carrier Jul-05 May-23 Toyofuji Shipping, Mitsubishi Heavy Industries 2 Ro-Ro vessel 2027-28 fiscal year Jun-24 Mitsui OSK Line 1 Coastal methanol carrier Dec-24 Jul-24 NS United Kaiun, Nihon Shipyard, Jaman Marine United, Imabari Shipbuilding Multiple Bulk carrier After 2027-28 fiscal year May-24 Orix, Tsuneishi Shipbuilding 2 Bulk carrier Jul-24 Production Company Product Country Target commercialisation Target capacity (t/yr) Mitsui E-methanol US Jan-24 1630000 Mitsubishi Gas Chemical Bio-methanol Japan Jun-24 Small amount Mitsubishi Gas Chemical, Kobelco E-methanol Japan NA NA Cosmo, Toyo Engineering E-methanol Japan NA NA Sumitomo Chemical E-methanol Japan 2030s NA Mitsui, Asahi Kasei Bio-methanol US Jun-23 NA Toyo Engineering E-methanol India 2030 NA Investment Company Product Country Target commercialisation Target capacity (t/yr) Mitsui E-methanol Denmark NA 42,000 Idemitsu E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 JOGMEC E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 Mitsu OSK Line E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 Table source: Firm's company releases Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Danish fund buys 90pc of Canadian H2 project

24/12/17

Danish fund buys 90pc of Canadian H2 project

Houston, 17 December (Argus) — Danish renewable fund Copenhagen Infrastructure Partners (CIP) has acquired a majority stake in German developer ABO Energy's hydrogen project in Newfoundland, Canada. CIP bought a 90pc stake in ABO's Toqlukuti'k project, which is expected to use wind to produce hydrogen and ammonia, the companies said on Tuesday. ABO will hold the remaining 10pc. Financial terms of the transaction were not disclosed. The multiphased project would produce hydrogen to decarbonize production at the nearby Braya Renewable Fuels refinery in Come-by-Chance as well as ammonia for export, ABO has said. Construction was to begin in 2026, the company said in March. However, Braya announced 9 December that it is weighing whether to idle its 18,000 b/d biorefinery before the end of year because of poor margins and uncertainty about US biofuels policy. ABO and CIP did not comment on Toqlukuti'k project plans, other than noting the site has the capacity to develop up to 5GW of onshore wind. Capitalizing on ample wind and its proximity to northern Europe, Newfoundland has been at the center of Canadian ambitions to build hydrogen capacity and export derivative products. In 2022, Canada signed an agreement to supply Germany with clean hydrogen and foresaw exports by 2025. However, exports are unlikely by next year as project timelines have slipped and northern European demand has failed to takeoff. Last month, another would-be Newfoundland hydrogen developer said it was exploring options to co-locate its project with a data center or steel manufacturing because export markets were taking longer than expected to develop. By Jasmina Kelemen Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

H2, e-LNG plant stuck awaiting German GHG credit system

24/12/17

H2, e-LNG plant stuck awaiting German GHG credit system

London, 17 December (Argus) — A Danish renewable hydrogen and e-fuels project is currently sat idle as it is waiting for Germany to ready the platform for companies to register compliant products and generate tradeable GHG quota credits, the developers told Argus . Danish firms Gron Brint and GronGas have finished building a co-located 2MW electrolyser and e-LNG production plant, respectively, to supply LNG trucks in Germany, but their project cannot profitably start production without access to the credits. The project was among the first to face the issue as it was the first to get certified , but more producers could encounter the same roadblock, the longer the wait for a registration platform goes on. Germany this month took a key step to unlock access to credits when Berlin endorsed certification schemes for renewable fuels of non-biological origins (RFNBOs) — essentially renewable hydrogen and derivatives. But the country's environment agency UBA only plans to start preparing its electronic database of certification for hydrogen next year, it recently told Argus . Without that database, firms cannot generate evidence that their product is compliant with rules nor access credits. Gron Brint and GronGas are waiting for UBA to clarify if firms could retrospectively add evidence to the platform, the companies' chief financial officer Rasmus Bang said. The Danish producers and their customer would otherwise be ready to trade in early 2025, according to Bang. "We're doing all we can to make people know there are actually plants ready to produce," GronGas chief executive Allan Olesen said. "It's worrying that they haven't even started making a database yet, so we don't even know when they'll be ready" Olesen said. "My worry is that it could be middle or even late 2025," he added. "It doesn't seem like this is a big task for UBA, it's not top of their priority list," Olesen said. Gron Brint targets customers in Germany rather than Denmark, as the former has more LNG trucks and a much more lucrative GHG credit system, Bang said. Denmark set lesser CO2 reduction mandates than Germany, so willingness to pay for such fuels is lower, he said. Its location in northern Jutland lacks gas grid access or compression facilities so blending into pipelines or transport in the form of compressed natural gas with later regasification is not viable, he added. The European Commission adopted its definition for renewable hydrogen 18 months ago, but practical systems to evidence and track compliant product still seem to be lacking across the bloc. Companies are frustrated with slow progress, but Germany and Denmark are still one step ahead of their peers in having recognised certification schemes. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

CBAM to drive low-carbon NH3 market: Woodside Q&A

24/12/16

CBAM to drive low-carbon NH3 market: Woodside Q&A

London, 16 December (Argus) — Ahead of the Argus Clean Ammonia Conference Europe in Rotterdam this month, Argus spoke to Rick Beuttel, vice president for new energy at Australia's Woodside Energy, about its recently acquired carbon capture and storage (CCS) ammonia production project in the US Gulf. Edited highlights follow. Tell me about Woodside Energy and how you ended up buying OCI's 1.1mn t CCS ammonia project in Beaumont, Texas? Woodside is a global energy company founded in Australia, providing reliable and affordable energy across the world. Our global portfolio includes LNG, oil and gas assets across Australia, the Gulf of Mexico, the Caribbean, Senegal, Timor-Leste and Canada. Our capital allocation framework also includes target investment criteria for new energy opportunities as we work towards creating a diversified and flexible portfolio that can respond to changes in demand and supply for our products. With respect to the Beaumont Clean Ammonia project, our acquisition positions Woodside to be an early mover in the lower carbon ammonia industry and meet growing customer demand globally. It supports our strategy to thrive through the energy transition with a low-cost, lower carbon, profitable, resilient and diversified portfolio. How is the Beaumont plant progressing? Is it still on track to start producing in 2025, with CCS operational from 2026? Woodside continues to target first ammonia production from 2025 for phase 1. Lower carbon ammonia production is targeted for 2026, following commencement of CCS operations to be provided to Linde by ExxonMobil. How is the regulatory market shaping up in Europe and what affect does this have on you as a producer? We believe that Europe's carbon border adjustment mechanism (CBAM) is going to be the driving force that pushes consumers of ammonia or hydrogen to adopt lower carbon molecules from 2026 onwards as a way to remain compliant and reduce costs. But Europe is not the only end market. There are tenders for lower carbon ammonia in Asia, and the OCI team and now Woodside have been active in pursuing those opportunities. In Asia, buyers prefer long-term contracts. European opportunities follow more closely the traditional ammonia market, whether for fertilizer or as a chemical feedstock, and are shorter term contract durations. Beaumont gives us the opportunity to have a balanced portfolio, both geographically and from a contract perspective. How achievable are premiums for low-carbon ammonia in the current market and do you expect CBAM implementation will aid this? For Woodside, phase 1 of the project exceeds our capital allocation targets. And we'd love a huge premium on day one. But you have to be pragmatic. While there is a great deal of climate sensitivity, people are running businesses and cost is a concern. In our view the return on investment is there and the premium will increase as the CBAM percentage increases. You also have to consider the underlying cycle of the ammonia market, global events, Europe's position with respect to gas supply and the efficiency or competitiveness of existing ammonia assets. All of these will likely cast as long a shadow as CBAM, particularly in the early years. The Woodside project adds 1.1mn t to the market in 2026. Do you see enough demand from new cases to consume the additional supply? There is also another project in Texas City, which will come on line soon. Of course, these two new assets coming on stream will have an impact. But if we look at the underlying competitiveness of the Gulf Coast, with low-cost gas and these new, large scale, very efficient assets, we believe they will compete. But we are not going to be running the facility at full rates from day one and we are more looking forward to trading the lower carbon ammonia. Some of that will go to Europe and some to Asia. Speaking of which, have you participated in either the Japanese or Korean tenders? We are looking at all markets where there is lower carbon ammonia activity, whether that is power generation, bunkering or other markets. Looking at power generation markets in Asia, Woodside has long-standing relationships with many of the countries from an LNG perspective. Making lower carbon ammonia from natural gas and shipping it around the world is very much analogous to shipping LNG. By Lizzy Lancaster Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: Oman's Hydrom eyes new markets in third auction

24/12/13

Q&A: Oman's Hydrom eyes new markets in third auction

Muscat, 13 December (Argus) — Omani state-owned hydrogen company Hydrom expects to target new markets when it launches its third auction round of green hydrogen blocks by the end of the first quarter 2025. Hydrom has so far awarded eight blocks following the first and second round of auctions in 2022 and 2023. Hydrom's managing director Abdulaziz al-Shidhani spoke to Argus at an investor day event in Muscat about the target markets, auction expectations and outlook for hydrogen markets in the near term. Could you give us an update on the progress of the eight concessions that were awarded? Can we expect any offtake agreement soon? We expect the first final investment decisions (FID) to be taken in 2026. In the meantime, developers have been allowed to carry out key activities, such as feasibility studies, pre-FEED, FEED and other measurement campaigns on the awarded blocks. These studies will provide insights into the discussion of the real cost of Omani hydrogen produced. But in parallel, developers are also actively engaging in discussions to secure offtake agreements including our inaugural gH2 Investors Day, a 1:1 matchmaking platform that was made available for both producers and offtakers to enter for further discussions. While it is unlikely any offtake will be finalised at this stage, progress on these activities is proceeding as planned. Could you give us colour on the region or size of the block that would be on auction for March next year? The specific regions for the blocks will not be determined until our market sounding activities are completed. But, the auction will remain open to all interested participants, as we have done in our previous rounds. That said, we are strategically targeting certain economies that had limited participation in earlier rounds, such as China, Latin America, North America and parts of Europe, and potentially Singapore. Some of these markets either lacked sufficient time to participate or have since adjusted their strategies and shown willingness to engage. The market sounding process, which will kick-start in early 2025, will allow us to reach out to these economies and other potential players. Through this engagement with them, we aim to better understand their interest and expected level of participation. We are also exploring tweaks to our existing auction model to accommodate new entrants. Additionally, we may consider offering smaller block sizes to capture niche opportunities in markets that do not require fill-scale. Is higher production costs of hydrogen a concern for Hydrom at all? We are super focused on what we have control on. If there is hydrogen to be produced, Oman will be producing it. While we do not have direct control over global market conditions, incentives, or penalties driving low-carbon transitions, we are confident in Oman's competitive positioning. To confirm and reiterate my point, if there are green hydrogen molecules to be produced cost-effectively, they will come from Oman. There are concerns around a global slowdown in hydrogen, with companies walking away from green hydrogen projects, what are your thoughts on this? We closely monitor global hydrogen market developments and remain informed through regular market reports. We are surely plugged in! While there have been challenges, such as supply chain constraints two years ago, those issues have largely been resolved as manufacturers expand capacity. This increased capacity is expected to drive price corrections, which will help us to make informed decisions, which will support more informed decision-making. On the positive side, several FIDs have been taken recently in Europe and India, signalling continued momentum in the market. In our case and based on our experience with the previous auction rounds, including participation from big industry names, we have not seen any serious discussions or indications of a slowdown. While there are always discussions about whether to wait or proceed, the industry in Oman is still going ahead with its plans. What is the outlook for hydrogen markets over the next 5-10 years? It is a positive outlook, though the market will take some time to stabilise. We remain optimistic, and this is why we are continuing to move ahead with our plans. Whatever we saw in the past few months were some hurdles, which are typical of an emerging industry and do not detract from our long-term potential of hydrogen markets. The outlook is positive. By Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more