- Aramco targets 2.5 mtpa blue ammonia by 2030, down from 11 mtpa previously
- High costs is slowing blue hydrogen and ammonia development
- Aramco reiterates expansion plans for natural gas and LNG
Saudi Aramco has scaled down its blue ammonia target for 2030 as it is waiting for more interest from offtakers currently held back by high costs, the company said on Tuesday.
In its 2024 earnings report released on Tuesday, Aramco said it is targeting the production of up to 2.5 million tons of blue ammonia annually by 2030, “subject to the availability of commercially viable long-term offtake projects”. This compares with a previous target of up to 11 mtpa of blue ammonia by 2030. Blue ammonia is made from hydrogen produced by natural gas using carbon capture technologies.
Aramco CEO Amin Nasser said during Tuesday’s earnings presentation that the company had ongoing commercial discussions with ammonia buyers.
“We continue to evaluate our growth opportunities and will only go ahead if we secure offtake agreements with appropriate returns,” the CEO said.
“Until these come to fruition, our focus is on discipline with a revised target of 2.5 mtpa by 2030 while continuing to pursue value creating opportunities in this space.”
READ Saudi Aramco upbeat on blue hydrogen exports despite cost challenges
Asked during the Q&A session with analysts to bring further clarity on the outlook for blue hydrogen and ammonia, Nasser said: “We have been saying from day one, it is expensive.”
He gave a reference price of ~USD 200/Boe of blue hydrogen and USD 400/Boe or more for green hydrogen.
“We are waiting for the market to develop and the offtake,” the CEO added.
He said the company had bid for potential customers a couple of months ago in South Korea.
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“We are waiting for the results of these bids. But the market is not developing quickly enough considering the high costs.”
Nasser added: “But we are ready to avail any quantities providing the offtake is there.”
Aramco’s revised ambition on blue hydrogen and ammonia comes as the industry is facing a number of challenges.
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“Different technologies move at different pace. Particularly on hydrogen we see that customers are coming later to the table to commit to long-term contracts,” Equinor’s CEO Anders Opedal said during an earnings call in February.
Gas and LNG expansion
Aramco on Tuesday reported net income for 2024 at USD 106.2 billion, down by ~12% from USD 121.3 billion the previous year as lower oil prices and refining margins weighed on the result.
Meanwhile, the company reiterated its commitment to gas and LNG expansion.
“We expect sales gas production capacity growth by 2030 of more than 60% over 2021 sales gas production levels to meet the Kingdom’s rising […] demand,” Nasser said. Aramco's 2021 sales gas production was 9.2 Bcf/day.
“This growth in gas has the potential to generate very attractive and stable returns with expected incremental operating cash flow of around 9-10 billion dollars in 2030 and of course subject to future sales gas demand and liquid price in a given year.”
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Aramco said phase one of its Jafurah unconventional gas field development remains on schedule for start-up later in 2025 and aims to reach production of 200 MMcf/day of sales gas before the turn of the year.
As for LNG, Aramco completed its first international investment in LNG in 2024 by acquiring a strategic minority stake in MidOcean.
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“Internationally, Aramco anticipates strong demand-led growth for LNG as the world continues on its energy transition journey, with gas being a vital fuel and feedstock in various industries, and critical to meeting the world’s need for secure, accessible, and more sustainable energy,” the company said. “As a result, Aramco plans to develop an integrated global LNG business, and is pursuing investment opportunities.” - AW
Photo: John_Silver/Shutterstock
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