Financing signed for $8.5bn Neom hydrogen project
1 March 2023
Neom Green Hydrogen Company (NGHC) has signed financing agreements with banks and lenders for the $8.5bn integrated green hydrogen project in Neom, Saudi Arabia.
According to a bourse filing by Saudi utility developer and investor Acwa Power, one of the three NGHC consortium companies, the total financing consists of $5.85bn of senior debt and $475m of mezzanine debt facilities.
Both are arranged on a non-recourse project finance basis, as follows:
- $1.5bn from the National Development Fund on behalf of the National Infrastructure Fund
- $1.25bn in the form of SR-denominated financing from the Saudi Industrial Development Fund
The balance is from a consortium of financiers, structured as a combination of long-term uncovered tranches and an Euler Hermes covered tranche, comprising:
- First Abu Dhabi Bank
- HSBC
- Standard Chartered Bank
- Mitsubishi UFJ Financial Group
- BNP Paribas
- Abu Dhabi Commercial Bank
- Natixis
- Saudi British Bank
- Sumitomo Mitsui Banking Corporation
- Saudi National Bank
- KFW
- Riyad Bank
- Norinchukin Bank
- Mizuho Bank
- Banque Saudi Fransi
- Alinma Bank
- Apicorp
- JP Morgan
- DZ Bank
- Korea Development Bank
- Credit Agricole
MEED previously reported that the project capital needs for the integrated Neom green hydrogen project have increased to $8.5bn, up 70 per cent from the original cost estimated at $5bn when the project was first announced in July 2020.
The project’s capital requirement had increased to $6.7bn during the intervening period, before reaching the current estimate.
The increases accounted for inflation since 2020 and the additional scope to make the project more self-sufficient and with lower operating costs.
The latest upward capital revision accounts for project financing costs, up-front fees, interest during construction, additional joint venture costs and land, among others.
Neom, Air Products and Acwa Power each have a 33.3 per cent stake in NGHC, the special project vehicle implementing the $8.5bn project.
Air Products is also the main engineering, procurement and construction (EPC) contractor and system integrator for the project and the exclusive offtaker of the green ammonia produced at the facility.
The integrated facility will produce hydrogen to be synthesised into carbon-free ammonia for export exclusively by Air Products to global markets.
Execution status
Air Products said the project’s engineering phase is 30 per cent complete, with all major subcontracts awarded. The land preparation is also complete.
Air Products signed a sub-contract agreement with India’s Larsen & Toubro (L&T) for the power grid and generation works for the Neom green hydrogen project, as MEED reported in January.
The contract covers the construction of a 2,930MW solar power generation plant, a 1,370MW wind power farm and a 400MW battery energy storage system, according to a source familiar with the plan.
The package also includes a power transmission network extending 190 kilometres.
The planned wind and solar power plants are located in northwest Saudi Arabia, close to the border with Jordan.
Notice to proceed
In April 2021, Acwa Power confirmed signing limited notice to proceed (LNTP) agreements for the overall EPC contract for the Neom green hydrogen project.
The agreements include an in-kingdom LNTP for the EPC contract between NGHC and Air Products Middle East Industrial Gases; and an out-of-kingdom LNTP for the EPC contract between NGHC and Air Products Equipment.
In addition to the renewable energy plants, battery storage and power transmission network, the Neom green hydrogen and ammonia project comprises 2,000MW of electrolysers to produce 650 tonnes of hydrogen a day and air separation units to produce nitrogen for the conversion of hydrogen into 1.2 million tonnes of ammonia a year.
In June 2021, US-headquartered Baker Hughes announced it would supply Air Products with advanced compression technology for the Neom facility’s electrolyser plant.
In December 2021, NGHC awarded Germany’s Thyssenkrupp Uhde Chlorine Engineers the contract to supply a more than 2GW electrolysis plant for the project.
Under this contract, Thyssenkrupp will engineer, procure and fabricate the plant based on the firm’s 20MW alkaline water electrolysis module.
In December, NGHC announced the signing of facility agreements with local, regional and international banks for the project.
It also announced the execution of a commitment letter with the Saudi Industrial Development Fund.
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