Essar Oil UK Limited (Essar) and Vertex Hydrogen (Vertex) have signed a “Heads of Terms” offtake agreement for the supply of over 280MW of hydrogen. The hydrogen will then be used to help decarbonise Essar’s existing production facilities including the new hydrogen powered furnace which was delivered in August 2022.

Vertex, a joint venture between Essar and Progressive Energy, is developing the first large scale, low carbon hydrogen production hub in the UK, as part of the HyNet Consortium. This will produce (in its initial phases) 1GW of hydrogen (the equivalent energy use of a large UK city like Liverpool) and capture some 1.8 million tonnes of carbon per annum.

By 2030, Vertex expects to deliver nearly 4 GW of low carbon hydrogen, equivalent to 40 per cent of the UK Government’s national target. According to the company’s statement, Essar achieved a new milestone in its ongoing transition to low carbon operations, following the UK Government’s decision in August 2022 to shortlist the construction of the hydrogen production plants and a separate carbon capture project at its site in Ellesmere Port, Cheshire. 

Furthermore, the two projects form part of the Essar’s £1 billion investment into a range of energy efficiency, low-carbon energy, and carbon capture and storage initiatives, designed to decarbonise its production processes and put Essar at the forefront of the UK’s shift to low carbon energy. The company is delivering plans to significantly reduce its emissions before the end of the decade, to become the UK’s first low-carbon refinery.

REGlobal’s Views: Like many large oil majors, Essar Oil plans to make its refining processes greener. Moreover, with their expertise in oil and gas business and related infrastructure like pipelines and storage units, foraying into low-carbon hydrogen is an optimum solution for such companies.