November 12, 2024 [H2 View]- Air Products CEO Seifi Ghasemi has announced ongoing negotiations for additional offtake from the 2.2GW NEOM green hydrogen plant in Saudi Arabia, driven by sustained high demand for hydrogen.
As it stands, the oil and gas major is set to offtake the full 600 tonnes of green hydrogen per day before its conversion into green ammonia from 2027. Ghasemi said, however, that additional offtake “would exceed the production of the facility.”
Speaking during the company’s Q4 2024 earnings call, the CEO said, “Various leading companies, including TotalEnergies, have issued requests for quotation (RFQ), requesting capacity equal to requirements that far exceed the capacity of our green hydrogen project and the construction in NEOM.”
Ghasemi explained that TotalEnergies’ RFQ, at 500,000 tonnes, covers only 10% of Europe’s refinery grey hydrogen use. NEOM’s output meets less than 5% of this demand.
“Beyond refineries, there is demand for several other hard-to-abate sectors, including shipping and steelmaking,” he added. “This strong demand in the market today gives us great confidence in our ability to load the green hydrogen facility and the construction in NEOM.”
In June, TotalEnergies inked a 15-year green hydrogen supply agreement with Air Products, representing the first contract signed under the French firm’s 500,000-tonne hydrogen supply tender.
The CEO also asserted that Air Products’ ability to lead the industry by acting first is what truly distinguishes them from competitors.
“There are clear advantages in moving first. We have been able to secure optimum locations for renewable resources, including for areas with strong sun and wind generation at the same time to produce low-cost green hydrogen.
“Finally, as we have demonstrated, the first mover gets the best seat at the table with customers to negotiate the best offtake agreements.”
Shifting focus to the NEOM project, Ghasemi clarified that the company is investing “about $800m, or less than 10% of the total project cost.
“NEOM has been financed by 23 banks providing more than 70% of the total capital needed,” he explained
“This is significantly less than the $1.7bn that we originally projected for this project and illustrates our ability to execute highly successful project financing.”
H2 View understands that Air Products’ shares have risen following its Q4 results, with the company posting an adjusted profit of $3.56 per share.
Additionally, adjusted EBITDA increased 12% year-over-year to $1.4bn, though quarterly sales reached $3.187bn – a slight decrease compared to the same period in 2023.
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