Energy & Mining

Alternate fuels

Emirati energy giant is embracing new fuels to maintain its leading position in the energy market in the post-hydrocarbon world.

With many visionaries in the world of sustainability seeing blue ammonia as the fuel of the future, due to its negligible carbon footprint, Emirati companies are about to begin the industrial-scale production of the low-carbon fuel. The state-owned Emirati oil giant, Abu Dhabi National Oil Company (ADNOC), started a joint effort with three Japanese companies in 2021 to explore the opportunity for the production of low-carbon fuels in the UAE.

Japan Oil, Gas, and Metals, INPEX, and JERA signed a joint study agreement with ADNOC in 2021 to undertake the required research before the production of blue ammonia in the UAE and its export to Japan. As the research phase is coming to a close in 2022, the design of a plant has begun. ADNOC has started work on a facility at the TA’ZIZ Industrial Zone, to the west of Abu Dhabi, where 1,000,000 tons of blue ammonia will be produced each year.

Blue ammonia is a compound of hydrogen and nitrogen. While the latter is abundantly available in the atmosphere, hydrogen can be tricky to produce cleanly, especially at a low cost. Natural gas, however, can be synthesized into hydrogen without mess using the right technology. This makes Abu Dhabi an ideal hub for blue ammonia, as the emirate is a pioneer of knowledge economy and has sizable natural gas reserves. Blue ammonia is not a particular variety of the compound. The word “blue” simply refers to relatively eco-friendly and low-waste production. A set of chemical properties in ammonia make it the ideal fuel. To put things in perspective, ammonia surpasses hydrogen, which is itself one of the humanity’s best bets in several ways: it has a higher energy density, it can be stored in the liquid form, and it is less polluting.

Public and private decision-makers in the UAE’s energy sector have noticed the potentials of blue ammonia. “As we collectively navigate the global energy transition, we believe hydrogen, and its carrier fuels such as ammonia, offer promise and potential as zero carbon energy sources,” says Sultan Ahmed Al Jaber, UAE Minister of Industry ADNOC’s Group CEO. Indeed, the global energy market may well be about to undergo a thorough restructuring, with low-carbon fuels becoming a viable choice in many industries such as mass transportation, power generation, and the steel industry. Emirati energy companies are doing their best to stay ahead of the curve should a paradigm change come to pass with the rise of blue ammonia as the fuel of choice for domestic users.

The Management of ADNOC want to maintain their leading position in the global energy market even in the post-hydrocarbon era.

If the research agreement between ADNOC and the three Japanese companies leads to any breakthroughs in blue ammonia production, ADNOC’s facility in the TA’ZIZ Industrial Zone can be quickly expanded. The plant has been designed in such a way that new lines can be added in a modular way as soon as the demand spikes, so as to raise the production accordingly.

In light of Europe’s ongoing energy crisis for home consumers in the wake of the hostilities in Ukraine as well as Asian industries’ insatiable thirst for fuel, there is every indication that a jump in demand for ammonia is imminent, which will herald the adoption of alternative fuels worldwide. Nevertheless, aside from the Abu Dhabi-based energy company, very few traditional oil and gas exporters are prepared for such an eventuality in the region.

The global market for ammonia as a fuel is still in its infancy for the time being. No shipment of the new fuel had been carried out before the summer of 2020, when 40 tons of blue ammonia was export from Saudi Arabia to Japan—mostly as a proof of the concept. Not many other energy suppliers have yet entered this emerging market. This will make ADNOC one of the first market players in the upstream and downstream energy sector to prepare itself for alternative fuels. In the highly likely event that blue ammonia catches on, ADNOC will be well-placed to turn into a leading exporter of the compound as well as the technological knowhow of its production.

No production will truly catch on without demand, and the majority of demand is currently coming from the East. Japan is an early adopter of blue ammonia for industrial purposes. The Emirati energy giant has therefore chosen to team up with Japanese buyers, thus securing a market for the UAE’s production of low-carbon fuels right from the outset. It has been an instance of farsightedness by ADNOC. Dominant market players are often oblivious to game changers, sticking with the long-established paradigms in their business. ADNOC, however, has felt the oncoming change, identified an alternative fuel for of the energy market of the future, and guaranteed the UAE’s status as a market leader in energy.