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ADNOC doubles its net hydrogen production capacity with a stake acquisition in ExxonMobil's Baytown project.
A major milestone has been achieved for the partnership between ADNOC and ExxonMobil, as ADNOC secures a 35 stake in the Baytown Blue Hydrogen complex. This initiative is poised to elevate the facility into the world's largest producer of blue hydrogen, with a capacity to generate approximately 0.9 million tonnes per annum MTPA of blue hydrogen and an additional MTPA of blue ammonia.
This development builds on ADNOC's ambitious strategy in global low-carbon hydrogen markets, ming for a leading role in the energy transition by securing a share of the growing market. By doing so, it doubles its net production capacity to roughly 0.6 million tonnes per annum by the year 2030.
The rationale behind this strategic partnership lies in several attractive factors that favor both parties:
Enhanced Project Confidence: The addition of ADNOC's stake provides further assurance for the project moving forward, alleviating concerns about the project's potential hold based on securing the US$3kgH2 tax credit from the 45V PTC.
Profitable Financial Prospects: A robust economic return is forecasted at an Internal Rate of Return IRR of 12.3, as assessed by Wood Mackenzie's valuation in their Lens Hydrogen platform, with potential for even greater returns through securing low-carbon ammonia export agreements.
Attractive Offtake Agreements: The project has already solidified contracts with r Liquide and JERA, with a non-binding term sheet agreement inked by ExxonMobil for 0.5 MTPA of low-carbon ammonia exports to JERA.
Meeting Industry Demand: SK Materials' commitment through a sales contract positions the facility to cater to existing demand from nearby industries. This setup provides a solid foundation for meeting immediate industry needs and participating in upcoming Japanese and Korean low-carbon ammonia auctions.
Enhanced Financial Support for ExxonMobil: The project supplies ExxonMobil's existing olefins plant, enabling the company to secure $330 million in capital expiture CAPEX support from the US Department of Energy.
Considering these developments, there might be interest from additional parties looking to join this pioneering eavor. For instance, JERA and SK Materials could potentially expand their involvement through further off-take agreements or by increasing their ownership stakes.
To gn deeper insights into this acquisition and its implications, including how our Corporate Strategic Analysis CSAS team views the deal and the ExxonMobil Baytown Blue Hydrogen complex using Lens Platform tools, watch our upcoming webinar. Register now to att or sign up for weekly insights directly from Wood Mackenzie experts.
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ADNOC ExxonMobil Blue Hydrogen Partnership Doubling Net Hydrogen Production Capacity US$3kgH2 Tax Credit Initiative ExxonMobils Baytown Project Expansion Low Carbon Ammonia Market Demand 0.9 Million Tons Per Annum Output Capacity