Saudi Arabia is poised to make a multibillion-dollar investment in green hydrogen, with plans to establish a new company dedicated to producing the low-carbon fuel, reported Bloomberg, citing sources.  

This initiative is part of the kingdom's broader strategy to diversify away from oil and gas, while maintaining its status as a key global energy supplier. 

The sovereign wealth fund of Saudi Arabia, chaired by Crown Prince Mohammed bin Salman, has initiated the formation of Energy Solutions, the sources said.  

This entity will focus on financing green hydrogen power production, a move that aligns with the kingdom's economic diversification efforts led by the Public Investment Fund (PIF).  

According to the sources, the launch of the new company, expected to be announced soon, will see former Thyssenkrupp Uhde CEO Cord Landsmann at the helm. 

PIF anticipates the company will invest a minimum of $10bn, with the potential for this amount to increase in the future based on hydrogen demand and its investment opportunities, they added.  

Some of these investments will be made alongside the state-owned oil company Aramco. 

PIF representatives declined to comment on the news.  

Saudi Arabia's ambition is to become one of the leading producers of hydrogen, which offers a carbon-free energy solution.  

Green hydrogen is produced using only water and renewable power, presenting an attractive option for reducing emissions in sectors where electrification is challenging. 

However, the production of green hydrogen is currently associated with high costs and logistical complexities, including the need for extensive infrastructure and safe transportation methods.  

These challenges have led to delays in many planned projects, as potential buyers are hesitant to commit to long-term contracts. 

Despite these obstacles, Saudi Arabia is advancing in the green hydrogen sector, with one of the few large-scale projects globally already under way.  

The $8bn project has secured a commitment from an equity partner to purchase its entire output, a significant step forward. 

In addition to green hydrogen, Saudi Arabia is also exploring blue hydrogen, which is produced using fossil fuels with carbon capture technology.  

Aramcohas expressed its intention to invest in blue hydrogen production. 

PIF governor and Aramco chairman Yasir Al Rumayyan stated in February that Saudi Arabia aims to supply 15% of the global blue hydrogen market.  

In other blue hydrogen news, Abu Dhabi National Oil Company recently signed an agreement to acquire a 35% stake in ExxonMobil's blue hydrogen and ammonia production facility in Texas, US.