Air Products will now pursue a project finance mega-deal to build the NEOM Green Hydrogen Complex in Saudi Arabia.
The company and its partners will close a non-recourse debt deal for $6.2bn “very soon” to finance the project, CEO Seifi Ghasemi said today on an investor call.
The debt will sit alongside $2.3bn of combined equity from Air Products, NEOM, and ACWA Power, representing a 75%/25% debt to equity split.
Air Products, which is the sole offtaker for the facility, will now invest approximately $800m of cash into the project instead of the original $1.7bn.
Meanwhile, the cost of the project – which consists of 4 GW of renewables powering production of up to 600 tons per day of hydrogen – has climbed to $8.5bn compared to an original capital estimate of $5bn, according to the presentation.
But, Ghasemi added, the offtake price of the green ammonia to Air Products remains the same as what was negotiated in July 2020 when the project was announced.
“We are project financing this thing with some of the biggest banks in the world giving us money,” Ghasemi said. “They have looked at this project […] and they’re willing to finance it, so I guess they all think this is a good project and a good prospect and they’re going to get their money back.”
Ghasemi noted there could be some upside for additional hydrogen production at the facility when compared to the initial design.
The significant amount of wind, solar, and electrolyzer capacity installed at the site, Ghasemi said, “might end up giving us the capability of making a lot more than the 1.2 million tons per year.”
“I personally think they’re could be an upside, but we’ll have to wait and see,” he added.
The executive said the company evaluates projects individually as to whether it will pursue project financing. Among other projects, Air Products is also building the Net-Zero Hydrogen Energy Complex in Alberta, Canada which will not use project financing, Ghasemi said. The company will “look at” using project financing for its mega-scale Texas green hydrogen project with AES, he added.
