Malaysian state-owned oil firm Petronas and Japanese refiner Eneos signed an agreement last week to advance studies for a commercial hydrogen production and conversion project in Kerteh, Terengganu.
Under the agreement, the firms will study the production of low-carbon hydrogen from Petronas' existing facilities, the production of green hydrogen from a new hydro-powered electrolyser facility, and the conversion of hydrogen into methylcyclohexane (MCH). MCH can be used as a liquid organic hydrogen carrier.
Petronas' facilities are expected to have a total hydrogen production and conversion capacity of up to 50,000 t/yr by 2027, according to the firm. The product will be exported in MCH form to Japan, where it will then be distributed as clean hydrogen to Japanese industries through Eneos' refineries.
"Once onstream, the project could potentially be the first commercial-scale hydrogen-to-MCH undertaking in the world," said Petronas. The Final Investment Decision (FID) for the project is expected to take place by the end of 2023.
The agreement follows an announcement by both parties last year that they would jointly study hydrogen supply chains in consideration of Petronas' hydrogen output potential.
The venture has also been selected as a project under the Japanese government's ¥2 trillion ($16.9bn) Green Innovation Fund, which aims to support green research and development projects that will help achieve Japan's decarbonisation ambitions.
Companies around the world expect a drop in oil demand in the longer term, and have been increasingly seeking to pivot to hydrogen as a more resilient alternative. Volatile oil and gas prices, and greater uncertainty over energy supplies as a result of the ongoing Russia-Ukraine conflict have served as further incentives for firms to seek alternative sources of energy.
Petronas views hydrogen as an alternative with "great potential" as "hydrogen is forecasted to contribute up to 18pc of the global energy mix by 2050, eliminating 6 giga tonnes of CO2 annually," said the firm, citing industry experts.
Petronas and Eneos are also exploring other hydrogen projects and opportunities for technology domestically and internationally, as part of their efforts to develop a competitive hydrogen supply chain that will support both firms' decarbonisation goals, said Petronas.
