S-OIL and Aramco sign agreement for low-carbon ammonia supply

South Korea’s S-OIL, under the leadership of CEO Anwar Al Hizazi, announced its latest collaboration with the global energy and chemical conglomerate, Aramco. On October 25, they signed a letter of intent (LOI) to focus on the procurement of low-carbon ammonia, a step forward in their commitment to bolstering South Korea’s hydrogen economy.

This LOI is a reinforcement of the memorandum of understanding (MOU) the two enterprises inked the previous year. The agreement aimed at establishing a hydrogen supply chain. The latest collaboration entails a cooperative strategy for Aramco to manufacture low-carbon ammonia in Saudi Arabia and then supply it to South Korea, where S-OIL will be the primary recipient. Aramco is a major shareholder of S-OIL.

Aramco’s production of low-carbon ammonia will leverage carbon capture and storage technology (CCS). On the other hand, S-OIL has outlined plans to import the ammonia, convert it to hydrogen, and subsequently employ it in projects aimed at reducing its carbon footprint and other associated ventures.

Ryu Yeol, in charge of S-OIL’s strategic management, commented on the development. He emphasised that by bringing low-carbon ammonia to the South Korean market, S-OIL can significantly enhance its contributions to curbing greenhouse gas emissions and foster the country’s budding hydrogen sector.

Previously, S-OIL had expressed its ambition to venture into the hydrogen sector. The company has been proactive in crafting strategies that cater to climate change challenges and in scouting opportunities for novel growth avenues. This includes their investment in FCI, specialists in hydrogen fuel cells, and a collaborative agreement with Samsung C&T, focusing on green hydrogen projects.

With the current LOI serving as a foundation, S-OIL is gearing up to establish a domestic infrastructure for the introduction of low-carbon ammonia. Additionally, the company plans to intensify its efforts in driving demand and fostering further business endeavors in related sectors.