Key Offtake Agreement Boosts Egypt’s Green Hydrogen Project Ahead of 2025 Decision

With strategic partnerships, secured offtake agreements, and robust financial backing, Egypt is poised to become a key player in global green hydrogen and ammonia markets.

Fertiglobe CEO Ahmed El-Hoshy has announced that the final investment decision (FID) on the Egypt Green Hydrogen project located in Ain Sokhna within the Suez Canal Economic Zone (SCZONE) can be expected in the first half of 2025.

The Abu Dhabi-listed Fertiglobe successfully secured a green ammonia offtake agreement with Hintco in Germany through the initial H2Global pilot auction for renewable ammonia. The auction was funded by Germany’s Federal Ministry for Economic Affairs and Climate Action (BMWK). The offtake agreement is a major milestone for Fertiglobe in promoting sustainable ammonia production, with El-Hoshy describing it as a “critical step towards FID of Egypt Green Hydrogen.”

Egypt Green Hydrogen Project: Consortium and development

The Egypt Green Hydrogen project is being developed by a consortium that includes Scatec, Fertiglobe, Orascom Construction, The Sovereign Fund of Egypt, and the Egyptian Electricity Transmission Company. Scatec, the lead developer and majority sponsor, holds a 52 percent ownership share in the project. The consortium’s goal is to create a 100-megawatt (MW) electrolyser facility that will produce renewable hydrogen, which will serve as feedstock for renewable ammonia production at Fertiglobe’s existing plant in Ain Sokhna.

The project will be powered by approximately 270 MW of solar and wind energy, with the capacity to produce around 13,000 tonnes of renewable hydrogen and up to 74,000 tonnes of renewable ammonia annually. The initial supply of renewable ammonia to European ports is expected to start in 2027, with potential volumes scaling up to 397,000 tonnes cumulatively by 2033.

Ammonia offtake agreement

Fertiglobe has entered into a 20-year ammonia offtake agreement with Hintco, which was formalized during the Egypt-EU Investment Conference on June 29, 2024. This agreement will accelerate the project’s development and advance it towards financial close, according to Scatec CEO Terje Pilskog.

Pricing and financial aspects

Fertiglobe will utilize renewable hydrogen from the Egypt Green Hydrogen project to produce renewable ammonia at its Ain Sokhna facility. The ammonia will be supplied to European ports starting in 2027, with a maximum contract value of €397 million and a delivered net price of €1,000 per tonne until 2033. This net price includes product price (81 percent), transport cost (9 percent), logistics cost (7 percent), and import duties (3 percent).

Fertiglobe’s bid of €811 per tonne (ex-factory) net product price was 37 percent lower than the bid cap, securing the deal with Hintco. The agreement guarantees an annual minimum offtake of approximately 40,000 tonnes, based on Hintco’s available purchase budget of €40 million per year.

Next steps

The project’s next steps involve selecting an electrolyser supplier and finalizing financing with international institutions, such as the European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Germany’s development finance institution and KfW subsidiary DEG, British International Investment (BII), and US International Development Finance Corporation (DFC).

Other major renewable projects announced during the Egypt-EU conference

During the Egypt-EU Investment Conference, Egypt secured four landmark framework agreements totaling €31.4 billion for the development of green ammonia projects, aimed at achieving an impressive production capacity of 6,241,000 tonnes per annum.

These agreements, overseen by Waleid Gamal El-Dien (Chairman of SCZONE), Mohamed El-Khayat (CEO of NREA), and Ayman Soliman (CEO of TSFE), signify a significant stride towards sustainable energy solutions.

Project details

1) Consortium of BP, Masdar, Hassan Allam Utilities, and Infinity Power

• Location: Sokhna Integrated Zone
• Investment: €13.5 billion
• Pilot Phase: Annual capacity of 330,000 tonnes, operational by Q4 2030
• Phase 1: Capacity of 2.5 million tonnes/year, operational by Q4 2032

2) Ocior Energy Holding (UAE-based)

• Location: Sokhna Integrated Zone
• Investment: €3.9 billion
• Pilot Phase: Annual capacity of 100,000 tonnes, operational by Q4 2029
• Phase 1: Capacity of 900,000 tonnes/year, operational by Q4 2031

3) Consortium of TAQA Arabia (Egypt) and Voltalia (France)

• Location: Sokhna Integrated Zone
• Investment: €3.8 billion
• Pilot Phase: Annual capacity of 355,700 tonnes, operational by Q4 2030
• Phase 1: Annual capacity of 355,700 tonnes, operational by Q4 2032

4) DAI Infrastruktur (Germany)

• Location: East Port Said Integrated Zone
• Investment: €10.2 billion
• Phase:7 million tonnes per annum, operational by Q4 2028

Conclusion

The Egypt Green Hydrogen project represents a significant step towards sustainable ammonia production and renewable energy integration. With strategic partnerships, secured offtake agreements, and robust financial backing, the Egypt projects are poised to make the country a key player in global green hydrogen and ammonia markets, contributing to environmental sustainability and economic growth.

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