Adnoc to sell blue ammonia to Japan's Idemitsu as part of hydrogen strategy

This is the second agreement between Adnoc and a Japanese company on the sale of ammonia

State-owned Adnoc will sell blue ammonia from its joint venture with OCI to Idemitsu for use in the Japanese company's refining and chemicals operations.

Blue ammonia is the chemical compound produced using hydrogen manufactured through steam methane reforming. Ammonia is one of the easiest ways to store and transport hydrogen.

Fertiglobe, the joint venture between Adnoc and Amsterdam-listed OCI, is developing a large blue ammonia plant in the UAE’s downstream centre in Ruwais. The plant will have a production capacity of 1,000 kilotonnes a year.

The shipment was sold at "an attractive premium" to grey ammonia, the company said.

Grey ammonia is produced from fossil fuel-powered hydrogen. While traditionally cheaper than other forms of hydrogen or ammonia, it has a relatively higher carbon footprint.

This is the second agreement between Adnoc and a Japanese company on the sale of blue ammonia.

Earlier this month, the company sold its first shipment of blue ammonia, produced in partnership with Fertiglobe, to Japanese trading house Itochu for use in fertiliser production.

The sale came after the signing of a preliminary agreement in July with Japanese companies to explore the commercial production of blue ammonia in the UAE.

Hydrogen plays an important role in industrial decarbonisation in Japan.

Gulf oil exporters such as Saudi Aramco and Adnoc are looking to capitalise on their existing crude oil trading relationships with buyers in Asia to sell hydrogen. The oil producers are prioritising the production and sale of the cleaner gas as a low-carbon alternative to fossil fuels.

Adnoc is part of an alliance with other Abu Dhabi-based entities such as Mubadala and holding company ADQ to develop a hydrogen economy in the UAE.

Adnoc already produces 300,000 tonnes of hydrogen on an annual basis for its downstream operations and plans to increase its output significantly.

On Monday, Saudi Aramco said it was exploring opportunities in blue hydrogen and is actively looking at exporting to key markets in Asia.

Last year, Aramco shipped blue hydrogen produced in Saudi Arabia to Japan. Aramco shipped the hydrogen in the form of the more easily transportable ammonia for use in zero-carbon power generation in Japan, one of its top importers of crude.

Updated: August 10th 2021, 12:28 PM