Hydrogen as a clean energy source will have its uses in mass transportation, oil and gas industry and more. Image Credit: Gulf News

Dubai: Hydrogen is starting to get its place in the Gulf energy industry’s future. A marker has sort of been set with the daily cost of production prices for hydrogen in the UAE, Saudi Arabia, Oman and Qatar being placed in the S&P Global Platts’ market tracker.

The total investment value of announced hydrogen projects in the Middle East amounts to $44 billion. Of this, $35 billion is being invested in projects that are expected to be operational by 2030. Investments in new production are being driven by hydrogen’s potential to deliver significant reductions in carbon emissions across the whole economy.

“Huge amounts of capital are being invested in hydrogen production in the Middle East,” said Alan Hayes, Head of Energy Transition Pricing at S&P Global Platts. “The projects under development will put the region at the center of the emerging hydrogen economy.

“The Middle East has the potential to become a global supply hub for hydrogen in much the same way as it is now for crude oil. This latest expansion of Platts’ hydrogen price coverage to include the Middle East will allow market participants to track the cost of production in this key region and importantly compare the costs of producing with other hydrogen production hubs around the world.”

On track with cost of production
The first hydrogen cost of production prices for Saudi Arabia and UAE "highlight the importance of regional differences" in feedstock prices in determining the relative competitiveness of hydrogen production around the world.

The assessments suggest a clear cost advantage for methane steam reforming in the UAE and Saudi Arabia in the current market. The first UAE assessment for steam methane reforming with carbon capture and sequestration is $5.60/kg. which is in line with the same production pathway in Saudi Arabia, which stands at $5.50/kg.

This compares to $5.95/kg in Western Australia and Eur5.70/kg ($6.43/kg) in the Netherlands.