Abu Dhabi National Oil Company (Adnoc) is set to acquire a 35% stake in US energy giant Exxon Mobil’s low-carbon hydrogen project in Texas under a strategic partnership agreement inked between the two outfits yesterday, according to a statement.

BACKGROUND- Initially slated to be operational by 2028, the project’s launch has been pushed to 2029 due to a dispute with the Biden administration over whether the plant qualifies for tax credits under the Inflation Reduction Act, Bloomberg reports, citing Exxon President of Low Carbon Solutions Dan Ammann.

Value of the stake? While the financial terms of the acquisition have not been disclosed, Adnoc is talking up its economics. The Texas facility is set to be “among the lower-cost blue hydrogen proposals,” Michele Fiorentino, Adnoc’s executive vice president for low-carbon solutions and business development, told the business information service. The story also got ink from Reuters and the Financial Times.

About the project: Exxon plans to make a final investment decision in 2025. The Texas plant is expected to be the largest of its kind in the world with a daily production capacity of 1 bn cubic feet of hydrogen and over 1 mn tons of ammonia.

Adnoc’s strategy: The Emirati oil giant is looking to expand its blue hydrogen portfolio in the “cost competitive regions to do so,” namely the Gulf and the US, Fiorentino said. The project will supply hydrogen for local refineries and users, while ammonia will be exported.

Exxon is already lining up offtake agreements and construction partners: Japan’s biggest power producer, Jera, inked a non-binding agreement in March to purchase 500k tons of low-carbon ammonia annually from the plant. France’s Air Liquide agreed to build and operate four large modular air separation units to supply some 9k metric tons of oxygen and 6.5k metric tons of nitrogen to the facility.

REFRESHER- This is Adnoc’s second US acquisition, after the energy giant acquired an 11.7% stake in the first phase of sustainable liquefied natural gas producer NextDecade's USD 18 bn Rio Grande LNG export facility in Texas in May.

IN CONTEXT- Adnoc has pushing into the US market for some time now. It’s reportedly looking to set up a trading desk in the States as part of its global expansion plans. The oil giant is also mulling a the acquisition of a stake in AmeriGas, the propane distribution unit of US utility holding company UGI Corp, through its subsidiary Adnoc Distribution, as part of plans to diversify away from oil.

Tags: