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Article30 Jun 2023

What’s in a NEOM?

A recent report from Citi Research’s Oliver Connor looks at NEOM, Saudi Arabia’s planned $500 billion city on the banks of the Red Sea which will house a massive hydrogen plant that could shift global dynamics in an important market.

NEOM, one of Saudi Arabia’s flagship infrastructure projects and its most ambitious giga-project, will feature the world’s first mega-scale hydrogen facility. It will harness 4 GW renewables (solar and onshore wind) to produce 230 ktpa hydrogen via electrolysis. The plan is that a plant will be constructed next door to convert this green gas to ammonia (1.2 mtpa). NEOM is an area the size of Belgium.

Map of NEOM Green Hydrogen Project

© 2023 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source: Citi Research, NGHC = Neom Green Hydrogen Company


Citi Research analysts reckon that the project is on track to start-up by 2027, with a key milestone in the project financing achieved recently with more than 20 local and international banks putting up nearly three-quarters of the $8.4 billion total investment.

Electrolysis of water utilizes about one-third of the input energy to break the hydrogen-oxygen bonds. So, the process needs inexpensive green power. And this is where NEOM comes into its own, with access to strong sunlight during the day and strong wind at night.

Globally, Citi Research analysts estimate that >175 GW of green gas projects are under consideration, equivalent to one-third of today’s hydrogen production. By far, MENA looks to be the most advanced region in terms of achieving scale this decade.

Schematic of NEOM Hydrogen Value Chain

© 2023 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source: Company Reports


Citi’s Energy Vision analysis highlights that the majority of MENA projects offer a cost of supply of <$3.5/kg (landed Europe). Given the role of renewables in Saudi Arabia’s Vision 2030, Citi Research analysts say the Kingdom will likely be a key contributor. But they also point to growing ambition among regional peers, including Egypt and Oman, with the latter targeting >1 mtpa green hydrogen exports by 2030.

Outside of MENA, they see the U.S., with strong support from the Inflation Reduction Act, as becoming a competitive source of supply. Australia is also well-positioned for hydrogen, given its land base and energy-export orientation, the analysts added.

For more information on this subject, please see MENA Diversified Utilities - How Do The Economics of NEOM Green Hydrogen Work?, published on 8 June 2023.

Citi Global Insights (CGI) is Citi’s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click here.



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