Neom’s UK hydrogen export ambitions face setback

• $2.7bn Immingham terminal on hold
• Critical to Neom’s hydrogen project
• No imported green ammonia subsidies

A planned UK facility seen as critical to the world’s largest green hydrogen project, the $8.4 billion development at Saudi Arabia’s Neom, has been put on hold, raising questions over how the fuel will reach buyers in Britain.

US-based industrial gas company Air Products, the exclusive off-taker for hydrogen from the Neom Green Hydrogen Company, has paused development of its £2 billion ($2.7 billion) terminal at the port of Immingham due to uncertainty over UK government incentives.

The Immingham Green Energy Terminal was designed to import green ammonia from Neom and convert it back into hydrogen for British industrial use, linking Saudi exports with one of the G7’s largest economies and supporting the UK’s clean energy goals.

It received planning approval in February and was expected to produce 76,000 tonnes of hydrogen annually – enough to power nearly a million UK homes or offset the emissions of around 300,000 cars.

“We are seeking regulatory clarity before advancing decisions around our European downstream investments, including Immingham,” Air Products said in a statement to AGBI. 

“We continue to engage with the UK government to determine whether the necessary policy support can be put in place to enable firm customer commitments.” 

Hydrogen is difficult and expensive to ship over long distances, so it is converted to green ammonia – a more stable form that is easier and cheaper to ship – and then “cracked” back into hydrogen at destination terminals. 

However current UK policy excludes imported green ammonia from subsidy schemes aimed at supporting domestic hydrogen production, making projects like Immingham financially unviable.

The Neom Green Hydrogen Company is a joint venture between Air Products, Neom and Saudi-listed renewables firm Acwa Power. The latter two are both backed by the Public Investment Fund, Saudi Arabia’s sovereign wealth fund. 

Its plant being built at Oxagon, Neom’s industrial city located in the Tabuk province, aims to produce 1.2 million tonnes of green ammonia a year.

Acwa Power chairman Mohammad Abunayyan said at the World Economic Forum on Wednesday that the plant is now 85 percent complete, with testing and commissioning scheduled for next year.

“We are going to export to Germany [and] Europe,” he added, but he did not mention the UK.

In February Acwa Power signed a memorandum of understanding with Germany’s Securing Energy for Europe to supply green hydrogen to the continent. 

Air Products is also working on receiving terminals in the Netherlands and Germany.

Adding to its obstacles, so far Neom has only one confirmed offtake agreement: a contract to supply 70,000 tonnes of ammonia annually to TotalEnergies between 2030 and 2045 – roughly a third of planned output. 

People familiar with the matter told Bloomberg in May that no other buyers have been secured.

Neom, the $500 billion giga-project at the heart of Saudi Crown Prince Mohammed Bin Salman’s Vision 2030, has already faced setbacks and spending cuts amid a growing budget deficit and rising debt.

Meanwhile Air Products reported a $1.7 billion quarterly loss in early May and said it was reviewing $5 billion worth of clean energy projects. 

The company said it would prioritise completing upstream facilities in Saudi Arabia while delaying further investment in Europe until market and policy conditions improve.