Saudi Arabia’s Giant Hydrogen Project Reaches 80% Completion
Alex Kimani

Saudi Arabia’s flagship NEOM Green Hydrogen Project has crossed a major milestone, with 80% of its construction work now complete across multiple sites, according to project partner Air Products (NYSE:APD). The sprawling project includes a large-scale green hydrogen production facility, solar and wind power farms, and an integrated transmission grid. The entire complex is expected to begin operations within two years, positioning it as the largest renewable-powered ammonia production facility globally.

Air Products confirmed that the 4 GW of combined solar and wind generation capacity remains on track for completion by mid-2026, with the first shipments of ammonia-based green hydrogen projected to start in 2027.

Situated in NEOM, the futuristic megacity under development in Saudi Arabia, the green hydrogen venture is jointly owned by ACWA Power, Air Products, and NEOM itself. 

Once fully operational, the facility aims to produce up to 600 metric tonnes of green hydrogen daily, converted into ammonia for easier transport and export—a key solution for industrial and transportation decarbonization worldwide. According to the NEOM Green Hydrogen Company (NGHC), the project is aligned with Saudi Arabia’s Vision 2030 and its Saudi Green Initiative. NGHC estimates that its production could offset approximately 5 million metric tonnes of CO? annually, roughly equivalent to removing 210,000 vehicles from the road.

Hydrogen Headwinds, Saudi Tailwinds

Saudi Arabia’s steady progress comes as many green hydrogen projects elsewhere face significant headwinds. Globally, offtake agreements, a critical component for project financing, remain scarce. BloombergNEF estimates that only about 12% of green hydrogen plants worldwide have secured firm customer purchase commitments. High upfront costs and the need for expensive industrial retrofits deter many potential buyers. Compounding this, green hydrogen remains up to four times more expensive than hydrogen produced from natural gas (gray hydrogen).

Nevertheless, NGHC has made notable progress on this front. In March 2025, Saudi utility ACWA Power signed a memorandum of understanding with Germany’s SEFE (formerly Gazprom Germania) to supply up to 200,000 tonnes of green hydrogen annually by 2030. While not yet a binding sales contract, the agreement signals strong interest from European buyers and contributes to ongoing efforts to establish a "hydrogen bridge" between Saudi Arabia and Europe. As a result, NGHC has tentative demand commitments for a significant portion of its projected production capacity.

Saudi Arabia’s Dual Strategy: Green Energy and Oil Expansion

While Saudi Arabia is ramping up investments in renewable energy and hydrogen, it continues to maintain its dominant position in oil and gas. Last year, Saudi Aramco announced dozens of new research and development projects at its Dhahran headquarters aimed at reducing emissions while continuing to produce roughly 9 million barrels of crude oil daily. Aramco projects that these technology advancements could lower its emissions by 15% by 2035, equivalent to 51.1 million metric tonnes of CO? annually.

“Our strategy is not about replacing one source with another, but rather about improving the efficiency and sustainability of all forms of energy to meet growing global demand,” said Ahmad Al-Khowaiter, Aramco’s executive vice president for technology and innovation.

Part of this strategy includes major investments in carbon capture and storage (CCS). At its Hawiyah gas processing facility, Aramco is capturing carbon dioxide for enhanced oil recovery, injecting it into underground reservoirs located 50 miles away. The company aims to reduce the cost of carbon capture by 50% to ensure commercial viability and has set a target to store around 9 million tonnes of CO? annually at its Jubail facility starting in 2028.

In parallel, Aramco has expanded its hydrogen portfolio, acquiring a 50% stake in Blue Hydrogen Industrial Gases Company (BHIG), a subsidiary of Air Products Qudra—a joint venture between Air Products and Qudra Energy of Saudi Arabia.

Diversifying Beyond Energy: Mining Sector Expansion

In addition to energy diversification, Saudi Arabia is accelerating the development of its mining sector, aiming to increase its contribution to GDP from $17 billion to $75 billion by 2035. Recent initiatives include partnerships with international mining companies such as Barrick Gold, Ma’aden, Zijin Group of China, and India’s Vedanta. In December 2024, the Kingdom finalized nine investment deals worth over 35 billion riyals ($9.3 billion) under its Global Supply Chain Resilience Initiative, targeting critical minerals needed for battery technologies and global supply chains.

“These agreements strengthen Saudi Arabia’s position as a key supplier of critical materials while building domestic manufacturing capacity and promoting sustainability,” said Khalid Al-Falih, Saudi Minister of Investment.

By Alex Kimani for Oilprice.com

 

 

 

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

 

 

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