Air Products CEO Seifi Ghasemi defended his company’s project development strategy against concerns over the apparent lack of offtake for large clean hydrogen projects the company is pursuing – concerns that have manifested in Air Products’ equity trading multiple.
Ghasemi was asked on the first quarter earnings call multiple times about prospects for offtake from its NOEM Green Hydrogen project in Saudi Arabia, which has already taken FID, and from its Louisiana Clean Energy Complex, a blue hydrogen project that would send the molecule into its Gulf Coast hydrogen pipeline and into global ammonia markets.
The executive noted that neither project had offtake contracts that were ready to be announced, but emphatically said there is demand for the products, which he expects will increase when European and other regulations take effect.
“We have a product that is going to come onstream that people are going to need,” Ghasemi said, citing low-carbon mandates and carbon border taxes that will go into effect in coming years.
“So what is the price for that? The price for that is not calculated on the basis that this is my capital, this is the return and therefore, we do that. When you have something that people need, you extract the maximum price.”
Another company executive, Samir Serhan, said later in the call that the company already has “three major on-site blue hydrogen contracts for 15-plus years with a premium for the blue product.”
Air Products’ equity multiple has compressed over the last 15 months amid concerns over the capital commitments and the lack of offtake, but Ghasemi said his company should still be among the most valuable in the sector.
“Having taken the risk and losing a lot of our market value because we have taken the risk, we deserve a better return on these projects than running around and trying to panic about the fact that our multiple is, instead of being a 30x EPS, it is 20x EPS,” Ghasemi said. “But the value of the company hasn’t changed.”
He added: “And if it was just a matter of saying, ‘This is my investment and this is a 10% return and this is the price,’ then you don’t need to pay somebody $15m to be CEO of Air Products.”
Asked where Air Products will sell its ammonia amid concerns about sufficient demand in end markets in the near term, Ghasemi noted they were talking to four sectors for green hydrogen: steelmaking, refineries, shipping, and mobility. For blue ammonia, the company is additionally exploring replacing coal in power plants and to decarbonize refining and chemical operations in the Gulf Coast.
“We have always said that it is going to go mainly for decarbonization of the power plants in Japan and in Korea,” he said. “But another significant demand that is being developed and I think there are significant signs that, that is real, is ammonia as a fuel for ships.”
Starting in 2025, ships to Europe will have to pay a tax on carbon emissions when entering European ports, he said.
“We believe this will generate significant amounts of interest in ammonia as a direct fuel for ships,” he added. “And you can check that people have already ordered ships that will use ammonia as a fuel and some of them will actually be on the water in 2026.”
