DUBAI: Abu Dhabi National Oil Company (ADNOC) will acquire a 35 per cent equity stake in Exxon Mobil Corp’s low-carbon hydrogen project in Texas.
The investment comes amidst a one-year delay for the project’s startup, now pushed to 2029, a decision that underscores the complexities and uncertainties inherent in developing large-scale renewable energy initiatives.
Exxon’s proposed facility, touted as the world’s largest low-carbon hydrogen production site, reflects a growing commitment to cleaner energy sources.
However, the company has expressed serious concerns regarding the financial viability of the project, particularly in light of potential restrictions on tax credits from the US government.
These credits are crucial for the project’s economic feasibility, especially given the limitations placed on incentives for facilities powered by natural gas—a primary energy source for hydrogen production.
Building confidence
ADNOC’s involvement not only signals confidence in Exxon’s project but also highlights a broader trend of international collaboration in the energy sector.
As Exxon’s President of Low Carbon Solutions, Dan Ammann, noted, the attraction of prominent partners like ADNOC indicates robust momentum for the low-carbon initiative.
However, the financial specifics of this transaction remain undisclosed, raising questions about the scale of investment needed to realise the project’s ambitions.
The hydrogen production target has been adjusted from an initial one million tonness annually to a revised goal of 900,000 tonnes of low-carbon hydrogen and over one million tonnes of low-carbon ammonia.
The shift emphasises the dual role of ammonia not just as a fertilizer in industrial applications but also as a potential medium for hydrogen transport.
The agreement with JERA, Japan’s leading power generator, to explore exporting 500,000 tons of low-carbon ammonia annually further illustrates the market opportunities available for hydrogen derivatives.
