In a move reflecting the Kingdom’s growing commitment to the renewable energy sector, Saudi Arabian Refineries Company (SARCO) announced that its subsidiary, Clean Energy, has signed a non-binding memorandum of understanding with the UK-based AGR for Renewable Energy. This memorandum concerns the purchase of the entire production capacity of the green ammonia plant that Clean Energy plans to build in Jazan City for Basic and Downstream Industries.
General context and objectives of Vision 2030
This announcement comes within the context of the comprehensive economic and energy transformation underway in Saudi Arabia, spearheaded by Vision 2030. The Vision aims to diversify the Kingdom's revenue streams away from oil, enhance environmental sustainability, and solidify its position as a global leader across various sectors, including clean energy. Green hydrogen and green ammonia projects are cornerstones of this strategy, as the Kingdom strives to become the world's largest producer and exporter of clean hydrogen. This move also aligns with the "Green Saudi Arabia" initiative, which aims to reduce carbon emissions and increase reliance on renewable energy sources.
The importance of green ammonia and its expected impact
Green ammonia is a clean fuel produced entirely from renewable energy sources. It is manufactured from green hydrogen (produced by hydrolysis of water using electricity from renewable sources) and nitrogen extracted from the air. Its importance lies in its being an efficient and safe hydrogen carrier, making it easier to store and transport over long distances at a lower cost compared to liquid hydrogen. It can also be used directly as a carbon-free fuel in vital sectors such as maritime shipping and power generation, in addition to its traditional role as a key component in fertilizer production.
Details of the agreement and its future impact
According to a statement issued by SARCO and published on the Saudi Stock Exchange (Tadawul), the memorandum of understanding (MoU) is valid for six months and is renewable. While the company clarified that there is no immediate financial impact, this MoU represents a crucial foundational step towards securing a strategic buyer for the entire output of the planned plant. This enhances the project's economic viability and attracts the necessary investment for its implementation.
Locally, the project will contribute to enhancing local content and providing specialized job opportunities in Jazan, bolstering its position as an integrated industrial hub. Regionally and internationally, this collaboration between a Saudi and a British company strengthens economic ties and positions the Kingdom at the heart of the global clean energy supply chain, reinforcing its role as a reliable energy supplier now and in the future.
