Green Hydrogen Offtake Risk: Saudi Aramco’s $8.4 B NEOM Project Hits 80% Completion, Faces Buyer Gap (2021-2025)

Offtake Bottleneck, Saudi Aramco’s NEOM Project Exposes Global Hydrogen Demand Risk

In 2025, the global green hydrogen sector shifted from a supply-side race to a demand-side reckoning, with Saudi Arabia’s giga-scale projects serving as the primary stress test. While the NEOM Green Hydrogen Company (NGHC) project achieved major construction milestones, its struggle to secure sufficient long-term buyers exposed a critical market failure. The industry’s focus pivoted from celebrating final investment decisions and construction progress to confronting the anemic state of global offtake, revealing a dangerous gap between ambitious production targets and bankable end-user demand.

NEOM Project’s Construction Success

The period leading into 2025 was defined by ambitious announcements and the formalization of mega-projects. This culminated in 2025 with tangible execution progress at an unprecedented scale. The NEOM project demonstrated that building giga-scale green hydrogen facilities is technically and logistically feasible.

• By June 2025, the $8.4 billion NEOM project, a joint venture between NEOM, ACWA Power, and Air Products, reached 80% construction completion, keeping it on track to produce up to 600 tonnes of carbon-free hydrogen per day by late 2026.
• The facility integrates approximately 4 GW of dedicated solar and wind power with a 2.2 GW alkaline water electrolyzer system supplied by thyssenkrupp, validating the deployment of electrolysis technology at a commercial scale previously unseen.

The Emerging Demand-Side Crisis

The project’s physical progress ran directly into commercial headwinds in 2025. The risk profile for major producers like Saudi Aramco and its partners shifted from construction and technology risk to pure market and demand risk.

• In May 2025, reports surfaced that the NEOM project was facing significant “demand risk, ” struggling to secure enough international buyers for its massive planned output of green ammonia.
• This project-specific issue reflected a global problem. According to the International Energy Agency (IEA), by late 2025, cumulative firm offtake agreements worldwide covered less than 2 million tonnes per annum (Mtpa), representing just 5% of the potential production from all announced hydrogen projects.
• This offtake bottleneck was further highlighted when Saudi Aramco itself delayed its own blue ammonia production target from 2027 to 2030 in March 2025, citing unfavorable market conditions and a lack of firm buyer commitments.

$8.4 B Investment, Saudi Aramco’s NEOM Project Nears Financial Close Amid Headwinds

The financial architecture of Saudi Arabia’s hydrogen ambitions was tested in 2025, as the massive capital required for supply-side buildout met the reality of a hesitant offtake market. The $8.4 billion investment in the NEOM project underscores the scale of capital at risk, while Saudi Aramco‘s concurrent strategic reassessment of its blue hydrogen plans signals a broader market recalibration based on commercial viability.

NEOM’s Capital Structure

The NEOM Green Hydrogen Company represents one of the largest single investments in the global renewable energy sector. Its financing serves as a blueprint for future giga-projects, combining sovereign and corporate backing.

• The project is a joint venture between NEOM, regional utility leader ACWA Power, and global industrial gas major Air Products, a structure designed to distribute risk across the value chain from production to offtake.
• Despite market headwinds, the project’s construction advanced rapidly through 2025, powered by its significant committed capital and the strategic backing of the Saudi government’s Vision 2030.

Aramco’s Blue Hydrogen Reassessment

While not a direct investor in the NEOM green hydrogen facility, Saudi Aramco‘s own hydrogen strategy provides critical context. The company’s decision to delay its flagship blue ammonia project indicates that the demand-side challenges are not unique to green hydrogen and reflect a market-wide problem.

• In March 2025, Saudi Aramco pushed its target for blue ammonia production to 2030, a significant delay from the original 2027 goal, signaling difficulties in securing bankable offtake agreements for low-carbon ammonia.
• This move places greater strategic importance on the success of the NEOM project to establish Saudi Arabia’s position as a global clean energy exporter and prove the commercial model for large-scale hydrogen trade.

Table: Key Financial and Strategic Decisions in Saudi Hydrogen (2025)

Saudi Arabia Drives Multi-Billion Dollar Green Hydrogen Pipeline
Saudi Arabia is aggressively expanding its hydrogen portfolio, with the $5 billion Neom green hydrogen project currently in procurement and the $0.35 billion Yanbu green hydrogen facility already operational. These projects are part of a broader push across Arab Gulf States, which have identified over $30 billion in hydrogen project volumes.

Energy Transition: KSA Leveraging Renewable Potential for Global Hydrogen Dominance
KSA’s substantial investment in green hydrogen projects like Neom signals a strategic shift from oil to a diversified energy economy, leveraging its vast solar resources. This pivot aims to establish Saudi Arabia as a global hub for clean hydrogen exports, crucial for its long-term economic resilience and global decarbonization efforts.

(Source: Stiftung Wissenschaft und Politik (SWP) — via Green Hydrogen Market Size to Hit USD 231.32 Billion by 2035)

Saudi Aramco’s Key Alliances, Air Products and Yara Deals Signal Market Path (2025)

In response to the offtake crisis, the strategic importance of partnerships that bridge the gap between production and end-users became paramount in 2025. The structure of the NEOM joint venture and, more critically, the late-year negotiations for a distribution agreement with Yara International, represent the primary mechanisms for de-risking the project’s output and creating a viable route to market.

NEOM’s Foundational Joint Venture

The project’s JV structure was designed to manage risk across the value chain, with each partner playing a distinct role. This integrated model was a strength during the construction phase.

• The partnership between NEOM, ACWA Power, and Air Products combines local development support, renewable power expertise, and industrial gas processing and distribution capabilities.
• Air Products serves as the project’s exclusive offtaker, bearing the primary responsibility for marketing and selling the green ammonia to global customers, internalizing the demand risk within the partnership.

Yara Negotiation as a De-risking Move

The most significant commercial development of 2025 was the effort to find a downstream partner capable of absorbing a large volume of green ammonia. The advanced talks with Yara signaled a potential breakthrough in solving the offtake challenge.

• By December 2025, Air Products and Yara International, a leading ammonia producer and distributor, were in advanced negotiations for a marketing and distribution agreement for renewable ammonia from projects including NEOM.
• A successful deal with Yara would provide a critical channel to the established ammonia market, particularly in agriculture and emerging clean energy applications, substantially de-risking the NEOM project’s commercial viability.

Table: Key Hydrogen Partnerships and Alliances (2025)

SWOT Analysis, Saudi Aramco’s Green Hydrogen Commercialization Hurdles

The strategic position of Saudi Arabia’s hydrogen initiatives, anchored by the NEOM project, reveals a fundamental conflict between immense upstream potential and downstream market immaturity. While strengths in project execution and resource availability were validated in 2025, the year’s primary lesson was the emergence of demand-side uncertainty as the single greatest threat to realizing the Kingdom’s hydrogen export ambitions.

Table: SWOT Analysis for Saudi Green Hydrogen Initiatives (2025)

One Critical Signal, Saudi Aramco’s NEOM Offtake Agreements Dictate 2026 Success

The success of Saudi Arabia’s entire green hydrogen strategy now hinges on one critical factor: the conversion of offtake negotiations into binding, long-term contracts. The progress of talks between Air Products and Yara International is the single most important signal to monitor, as it will determine whether the NEOM project can bridge the gap from a construction marvel to a commercially viable enterprise.

• If binding offtake agreements for a significant portion of NEOM’s output are announced in the next 12-18 months, watch for a ripple effect of positive final investment decisions (FIDs) on other mega-projects globally. This would signal that the market has sufficient confidence in demand to absorb giga-scale supply, potentially unlocking a new wave of capital into the sector.
• If the Yara negotiations falter or no major offtake deals materialize by the time NEOM’s commissioning begins in 2026, watch for project delays and a potential scaling back of Saudi Arabia’s 2030 hydrogen targets. This would validate the market’s deepest fears about demand risk, likely causing a broader contraction in hydrogen investment and a pivot toward smaller, more modular projects tied to specific local industrial users.

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