Deal details: The financing comprises $5.85bn in senior loan and $475mn in mezzanine debt facilities. This includes:
– $1.5bn, provided by National Development Fund (NDF), on behalf of National Infrastructure Fund (NIF)
– $1.25bn, provided by Saudi Industrial Development Fund in the form of SAR denominated financing
– Remaining $3.6bn, provided in a combination of long-term uncovered tranches and an Euler Hermes covered tranche by a 23-member consortium including JP Morgan, Credit Agricole and Sumitomo Mitsui Banking Corporation
The funding will aid NEOM Green Hydrogen Company - a joint venture between NEOM, ACWA Power, and Air Products - in constructing the project. The transaction will be among the largest green loan-backed project financings in the world.
Project details: The NEOM Green Hydrogen Project is being constructed in the industrial city of Oxagon. The $8.5bn facility will be integrated with up to 4 GW of solar and wind energy to produce up to 600 tonnes per day of carbon-free hydrogen by the end of 2026. The output from the project, which is generated in the form of green ammonia, will be off-taken by Air Products under a 30-year agreement. The company intends to distribute the ammonia to global demand centres, with a focus on northern Europe, to serve mobility and industrial markets.
Saudi Arabia’s green hydrogen ambitions: The current transaction aligns with the country’s ambition to diversify its oil and gas reliant economy by becoming a major exporter of green hydrogen globally. Saudi Arabia has the potential to generate green hydrogen in the long-term at a cost of $1-2 per kg, due to low natural gas and renewable electricity prices. The low levelized cost of hydrogen production combined with the availability of existing infrastructure for export, would enable the country to dominate the low-cost green hydrogen export market globally and supports its ambition to achieve net zero emissions by 2060.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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