Aker Horizons has signed a letter of intent (LOI) with the German gas group VNG to supply green ammonia from Narvik, Northern Norway.

VNG intends to procure up to 200,000 tonnes of green ammonia per year from Aker Horizons’ large-scale green industrial hub under development in Narvik as of 2028. The green ammonia will be shipped from Narvik to terminals in Germany, where VNG will distribute it further as ammonia or hydrogen to its customers, who will use it to decarbonize their operations. The LOI is a first step towards a firm supply agreement between the parties and could be expanded to further areas of collaboration.

The agreement was signed in Berlin during a visit by Norway’s Minister of Trade, Industry and Fisheries Jan Christian Vestre to German Vice-Chancellor Robert Habeck. The partnership between Aker Horizons and VNG supports Norway’s commitment to become a key supplier of clean hydrogen to Germany and the European Union (EU), helping foster new green industrial development and strengthening European energy security.

“The Narvik project is an important milestone in the development of industrial-scale production of green hydrogen and green ammonia in Europe, and we are pleased to be joined on this journey by an established industry player such as VNG,” said Kristian Røkke, CEO of Aker Horizons. “Achieving a fully-decarbonized energy system requires close collaboration between governments, local authorities, regulators, investors, and industry. Through this collaboration, Aker Horizons and VNG will accelerate the ramping up of the hydrogen economy in line with German and EU ambitions, supporting the decarbonization of hard-to-abate industries.”

“Norway has been a stable and trustworthy energy supplier for VNG for many years and will remain so in the future. We are pleased that the Letter of intent signed today will be the foundation for future cooperation with Aker Horizons and at the same time strengthen the energy relationship with Norway. VNG and Aker Horizons have complementary skills, strengths and know-how, providing a solid foundation to develop green business models,” Ulf Heitmüller, CEO of VNG, explained. “Our goal is to drive decarbonization in eastern Germany, especially in industry. The purchase of green ammonia from the Narvik project might be an important step along the way,” Heitmüller added.

Norway aims to actively contribute to the development of the hydrogen market in Germany and the EU. In January 2023, Norway and Germany reaffirmed their joint intention to ensure large-scale supply of hydrogen by 2030 and to establish the necessary infrastructure from Norway to Germany. Germany estimates the country will need by 2030 up to 130 terawatt hours (TWh) of hydrogen, including derivatives such as ammonia, methanol or synthetic fuels, of which 40-75 TWh would be made from renewable electricity, i.e. green hydrogen. 50-70 percent of Germany’s hydrogen needs are expected to be covered through imports. Until 2030, Germany will be prioritizing its industrial sectors for the use of hydrogen.

Aker Horizons is developing green value chains based on competitive renewable energy that is integrated with midstream products such as hydrogen, and downstream end-use products such as green ammonia in Narvik. The ammonia production capacity at Narvik is estimated at 1,000-1500 tonnes per day by 2028.

“Aker Horizons is actively engaging with hydrogen offtakers in continental Europe and is experiencing strong interest from German industry. The LOI with VNG, a significant player in the German market, is one of several recently signed with German companies. These agreements reflect Germany’s commitment to realize its hydrogen ambitions, providing significant opportunities for Norwegian producers,” said Knut Nyborg, Managing Director of Aker Horizons Asset Development.

Aker Horizons is also developing a large-scale production facility for blue hydrogen at Aukra, on the Norwegian west coast, with partners CapeOmega and Shell, with an estimated capacity of 2,500 MW or 1,200 tonnes hydrogen per day by 2030. Together with Narvik, the Aukra project has the potential of being a significant contributor to Norwegian hydrogen exports to the EU, enabling substantial CO\2\-emission reductions.

Industrial scale and reliable supply of hydrogen to Germany and the EU would be supported by the construction of a hydrogen pipeline from Norway to Germany. This is currently under evaluation by Gassco, DENA, Aker Horizons and other industrial partners. The feasibility study will be presented by the end of the first half of 2023. In order to realize high volumes of clean hydrogen as fast as possible, Norway and Germany have announced a joint plan to use hydrogen produced from natural gas with carbon capture and storage, i.e. blue hydrogen, for a transition period. Green hydrogen can subsequently be phased in into the common transport infrastructure.