Saudi Aramco is considering the export of liquefied natural gas (LNG) as talks around the sale of blue hydrogen become challenging, reported Bloomberg.
Aramco has been investing billions of dollars in a bid to boost gas production.
The company aims to meet rising gas demand in Saudi Arabia and use the remainder to produce blue hydrogen.
According to Aramco CEO Amin Nasser, with the existing technology, producing hydrogen may cost the equivalent of around $250 per barrel of oil.
“It is very difficult to identify any off-take agreement in Europe” for blue hydrogen, Nasser was quoted as saying on a call with analysts.
“Even the customers in Japan and Korea are waiting for government incentives. Until they get these incentives, it will be costly for them to pursue that blue hydrogen.”
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He said that unless supply agreements are signed, the oil giant will not make a final investment decision to construct hydrogen export facilities.
“This is a very expensive programme,” Nasser added.
“It is a lot of capital and you need customers. So we will not sanction a project without securing an off-take agreement.”
Despite having some of the world’s largest gas reserves, Saudi Arabia has not fully explored them in the past.
However, due to increased demand for gas, particularly after Russia invaded Ukraine and subsequent sanctions, the kingdom plans to extract more gas from its untapped Jafurah field.
The country intends to invest billions of dollars in developing the field and has initiated talks with midstream investors for pipeline projects, according to the company’s chief.
Nasser’s statement came after Aramco announced its Q1 net profit of $31.9bn (119.63bn) and revealed its proposal to boost its yearly dividend of $76bn.