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The final investment decision (FID) on the Egypt Green Hydrogen project, located in Ain Sokhna in the Suez Canal Economic Zone (SCZONE), is expected in the first half of 2025, Ahmed El-Hoshy, CEO of Fertiglobe, said.
The Abu Dhabi-listed Fertiglobe secured a green ammonia offtake agreement with Hintco in Germany through the first H2Global pilot auction for renewable ammonia, funded by Germany's Federal Ministry for Economic Affairs and Climate Action (BMWK).
A consortium of Scatec, Fertiglobe, Orascom Construction, The Sovereign Fund of Egypt, and the Egyptian Electricity Transmission Company is developing the Egypt Green Hydrogen project.
In a separate statement, Scatec announced that based on the award, Fertiglobe and Egypt Green Hydrogen have entered into a 20-year ammonia offtake agreement. The agreement was signed at the Egypt-EU Investment Conference in Egypt on 29 June 2024.
"With Fertiglobe securing an offtake agreement for the ammonia, Egypt Green Hydrogen will accelerate the project's development and advance it towards financial close," said Scatec CEO Terje Pilskog.
Pricing green ammonia
Fertiglobe will use renewable hydrogen from Egypt Green Hydrogen as feedstock to produce renewable ammonia at its existing ammonia plant in Ain Sokhna.
It will begin supplying renewable ammonia to European ports starting 2027 for a maximum contract value of €397 million and a delivered [net] price of €1,000 per tonne until 2033, according to H2Global.
Fertiglobe put in a bid of €811/tonne (ex-factory) net product price, 37 percent lower than the bid cap to clinch the deal, according to Hintco. The net price of €1,000 per tonne is composed of product price (81 percent), transport cost (9 percent), logistics cost (7 percent) and import duties (3 percent).
Fertiglobe noted in its statement that the supply will start at a potential 19,500 tonnes in 2027 (subject to actual production start date and supply availability), with volumes potentially scaling up to 397,000 tonnes cumulatively by 2033.
The purchase agreement with Hintco guarantees the successful bidder an annual minimum offtake of approximately 40,000 tonnes, based on its available purchase budget of €40 million per year, according to the German company.
Scatec said the next steps for the project include selecting an electrolyser supplier and finalising financing with international institutions that include the European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Germany's development finance institution and KfW subsidiary DEG, British International Investment (BII), and US International Development Finance Corporation (DFC).
Scatec is the lead developer and majority sponsor of Egypt Green Hydrogen, with a 52 per cent ownership share. In 2021, Scatec and partners agreed to develop, build, own, and operate a 100-megawatt (MW) electrolyser facility to produce renewable hydrogen, which will be used as feedstock for the production of renewable ammonia at Fertiglobe's Ain Sokhna plant. The project will be powered by about 270 MW of solar and wind power capacity and deliver approximately 13,000 tonnes of renewable hydrogen and up to 74,000 tonnes of renewable ammonia annually.
The H2Global Foundation was established in 2021 to accelerate the emergence of markets for clean hydrogen and other zero-and low-emission technologies outside the EU. The German government has committed €4.43 billion to H2Global’s ‘double-auction’ mechanism implemented by Hintco to facilitate the rapid expansion of renewable hydrogen and derivative products.
Egypt inks €31bln deals for green ammonia projects, targets 6.2 mtpa production
(Writing by P Deol; Editing by Anoop Menon)
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