The NEOM green hydrogen project in Saudi Arabia is likely to sign definitive financing agreements (‘dry close’) very soon and full financial closure is expected two months after that, Air Products, one of the consortium partners revealed in an earnings call.

Financial institutions see ‘tremendous value proposition’ and have shown ‘significant interest’, Air Products said in a financial update.

“The non-recourse financing was two times oversubscribed and received commitments from more than 20 global financial institutions. The three equal-ownership partners―Air Products, NEOM, and ACWA Power―will now fund the project with a mix of 25 percent cash and 75 percent non-recourse (debt) project financing,’ according to the company.

Costs soar

However, the project cost has soared 70 percent to $8.5 billion against the $5 billion estimated when the project announced in 2020. Inflation, since 2020, alone added $0.5 billion to costs, the update said, adding that $1.2 billion more will be spent on making the project self-sufficient and to lower operating costs.

Project financing costs, up-front fees, interest during construction, additional joint venture costs, spares, land will add another $1.8 billion to the capital needs of the project.

Air Products is the sole offtaker and marketer for all the green ammonia produced under an exclusive 30-year contract and the price remains the same as negotiated in July 2020 when the project was announced, the company said.

On construction progress on the ground, the company said engineering is 30 percent complete and all major subcontracts have been awarded.  Land preparation has been completed and construction has begun.

In early February, Saudi Arabia’s Ministry of Industry and Mineral Resources issued the first industrial operating license in Oxagon for NEOM Green Hydrogen Company (NGHC).

Air Products is the engineering, procurement, and construction contractor and system integrator for the project.

Read More:

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Saudi NEOM to start producing green hydrogen in 2026

(Writing by Sowmya Sundar; Editing by Anoop Menon)

(anoop.menon@lseg.com)